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| Version 1 | Version 2 |
|---|---|
| Santander to raise SVR to 4.74% | Santander to raise SVR to 4.74% |
| (7 months later) | |
| Thousands of Santander mortgage customers on the lender's standard variable rate (SVR) face payment increases from October, following the bank's decision to increase the rate by 0.5 percentage points to 4.74%. | Thousands of Santander mortgage customers on the lender's standard variable rate (SVR) face payment increases from October, following the bank's decision to increase the rate by 0.5 percentage points to 4.74%. |
| The lender said the move, which will add £26 a month to a £100,000 mortgage, had been driven by several factors, "most notably the fact that for the last three years the amount it costs us to provide mortgages and the rates we offer our savings customers have been increasing, despite the base rate remaining static". It added it had no intention of further increasing SVR. | The lender said the move, which will add £26 a month to a £100,000 mortgage, had been driven by several factors, "most notably the fact that for the last three years the amount it costs us to provide mortgages and the rates we offer our savings customers have been increasing, despite the base rate remaining static". It added it had no intention of further increasing SVR. |
| The rise applies to Santander mortgage customers including those acquired under the Abbey for Intermediaries brand, but not those from Alliance & Leicester. The actual number of customers affected is confidential, but it is believed to be a few hundred thousand. | The rise applies to Santander mortgage customers including those acquired under the Abbey for Intermediaries brand, but not those from Alliance & Leicester. The actual number of customers affected is confidential, but it is believed to be a few hundred thousand. |
| Although the Bank of England base rate has remained at an historically low 0.5% for more than three years, Santander said the correlation between that and mortgage rates had been weakening for some time. | Although the Bank of England base rate has remained at an historically low 0.5% for more than three years, Santander said the correlation between that and mortgage rates had been weakening for some time. |
| "Additionally, the cost of running a bank in the UK has increased dramatically through a combination of increased liquidity, capital and funding requirements," a spokesperson said. | "Additionally, the cost of running a bank in the UK has increased dramatically through a combination of increased liquidity, capital and funding requirements," a spokesperson said. |
| The bank will also change the cap it has on its SVR from 24 September. Since 2009 it has promised to be within 3.75% of the BoE base rate, but that will rise to 4.99%. It said the move allows for any future BoE base rate moves. | The bank will also change the cap it has on its SVR from 24 September. Since 2009 it has promised to be within 3.75% of the BoE base rate, but that will rise to 4.99%. It said the move allows for any future BoE base rate moves. |
| Santander is not the first lender to increase its SVR, with Halifax and Cydesdale Bank among those who increased their rates in the spring. Santander said it had been able to resist an increase through the first half of 2012, but market conditions had forced it to follow suit. | Santander is not the first lender to increase its SVR, with Halifax and Cydesdale Bank among those who increased their rates in the spring. Santander said it had been able to resist an increase through the first half of 2012, but market conditions had forced it to follow suit. |
| Rival lender HSBC said it had no plans to raise its SVR, currently at 3.94%, or that on First Direct mortgages, currently at 3.69%. Nationwide has committed to keeping its base mortgage rate within 2% of BoE base rate. | Rival lender HSBC said it had no plans to raise its SVR, currently at 3.94%, or that on First Direct mortgages, currently at 3.69%. Nationwide has committed to keeping its base mortgage rate within 2% of BoE base rate. |
| Mark Harris, chief executive of mortgage broker SPF Private Clients, accused Santander of "profiteering, pure and simple". | Mark Harris, chief executive of mortgage broker SPF Private Clients, accused Santander of "profiteering, pure and simple". |
| "The move puts its SVR towards the upper end of the scale when compared with other big lenders such as Halifax, Woolwich and Nationwide," he said. | "The move puts its SVR towards the upper end of the scale when compared with other big lenders such as Halifax, Woolwich and Nationwide," he said. |
| In its 2011 annual report Santander seemed to suggest it was making money out of SVR customers, stating: "Increases in the proportion of customers on SVR mortgages helped to partly mitigate the impact of low interest rates." | In its 2011 annual report Santander seemed to suggest it was making money out of SVR customers, stating: "Increases in the proportion of customers on SVR mortgages helped to partly mitigate the impact of low interest rates." |
| In 2011, it was the UK's second largest lender, accounting for an estimated 17% of the mortgage market, however since then, it has been scaling back its lending activity, with borrowers repaying more than was lent in new mortgages over the first six months of 2012. | In 2011, it was the UK's second largest lender, accounting for an estimated 17% of the mortgage market, however since then, it has been scaling back its lending activity, with borrowers repaying more than was lent in new mortgages over the first six months of 2012. |
| Recent figures from the Council of Mortgage Lenders showed a 20% drop in the number of remortgages taken out in June, but this rate rise, combined with a flurry of cheap deals, could encourage more homeowners to do so. | Recent figures from the Council of Mortgage Lenders showed a 20% drop in the number of remortgages taken out in June, but this rate rise, combined with a flurry of cheap deals, could encourage more homeowners to do so. |
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