Homeowners will face hikes from their mortgage lenders as Standard Variable Rates (SVR) increase which will equal to £300m.
An SVR is the name given by mortgage lenders which is a rate that borrowers move on to when their initial fixed or tracker rate deal has ended.
One million mortgage holders will pay hundreds of pounds extra per year as a result of the increase in rates that went live yesterday. Major lenders have already applied the increase to their rates which mortgage holders will see next month.
The Standard Variable Rate increase will not be welcomed by consumers as the struggle to meet rising living costs continues.
A recent survey from Which? said that 70% of borrowers were concerned about the increase and the impact it would have on their finances and 14% admitted to already struggling with payments before the increase had even taken place. Nearly half of the people that were asked in the survey said that if their payments increased by £50 a month they would need to cut back on their spending. 11% said they would not have enough money for essentials such as food.
Which? Chief executive, Peter Vicary-Smith commented: “Our advice to anyone struggling with their mortgage repayments is speak to your lender straight away. It is encouraging that a third of people we spoke to had approached their lender, but, worryingly, in one in five cases, they said their lenders offered no help at all.
“This is just not good enough and we want to see banks do more to help their customers who are struggling. These SVR rises are the consequence of the lack of competition in the market and the failure of the Government to take action to promote competition.”
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By Amanda Bainbridge