Q I am coming to the end of a five-year fixed-rate deal on the 90% mortgage I have on my flat. At 6% the rate is pretty high ,so I am assuming I will see that drop when I move on to my lender's standard variable rate (SVR). If I choose to do this is it likely to rise beyond 6% in the next couple of years, and if so what kind of fixed rate am I likely to get considering my loan-to-value ratio? RG
A You are right in thinking that when your five-year fix comes to an end you are likely to pay a lower rate of interest when you move on to your lender's SVR for existing borrowers. An SVR of around 4.7% is common among the big high street lenders, while
Only a few mortgage lenders explicitly link their SVR to the Bank of
Assuming your lender does link its SVR to base rate, and that it charges a typical 4.74%, your variable rate would exceed 6% if the base rate went up to 2% from its current 0.5%. This is unlikely to happen in the next few months as the BoE has signalled it will keep rates on hold for at least another year. And when they do eventually rise, it has been suggested that rates will go up only gradually and will settle at a high point of 2%-3%. So if you are happy to believe the predictions of the BoE's monetary policy committee, which is responsible for setting rates, it is probably safe to stay on your lender's SVR for the time being. But you might want to consider putting the savings you will make on your monthly mortgage payments towards paying off a bit more of your mortgage.
As to what kind of fixed rate you could get, not that many lenders offer 90% loans to borrowers who are remortgaging. Among those that do, the Post Office has a no-fee deal of 4.75% fixed until
Most Popular Stories
- Ukraine Crisis Limits Losses in Gold, Silver
- Can GOP Dodge Immigration Bullet?
- Software Writers Sought in Indiana
- Chiquita, Fyffes to Form Top Banana
- Photo ID Required for Unemployment Benefits
- Big Earthquake Rumbles Northern California
- China's Money Rate Drops on Slowdown Concern
- Mt. Gox Files for Bankruptcy in U.S.
- Tech Firms to Increase Hiring for 4th Year in a Row
- '300' Sequel Conquers Box Office Foes