The Standard Variable Rate quoted by a lender is the interest rate that a lender chooses to apply to mortgages, typically when a customer’s fixed rate or tracker rate ends. Unlike a tracker mortgage, the Bank may choose not to follow the specific indices linked to the tracker mortgage (usually the Bank of England’s Base Rate) when adjusting their Standard Variable rate.
Therefore, the Bank of England Base Rate might rise by 0.5% but unlike in the case of a Tracker Mortgage, the lender may choose not to adjust its standard variable rate, or delay such an increase. It could even reduce its rate, although this would be unlikely in such circumstances.
In most scenarios it is reasonable to assume that the bank’s Standard Variable Rate will rise and fall roughly in line with increases and decreases in the Bank of England’s Base rate over the medium term, but there may be a time lag or the bank may choose to adjust its rate independently.
Unlike a tracker, there is no guarantee as to what the rate will do when the Bank of England changes its Base Lending Rate but, in most cases, mortgages that revert to a standard variable rate are unlikely to have very large penalty clauses for early repayment, meaning that most of us can remortgage without too much expense were a lender were to unilaterally raise its standard variable rate above the market.
It is therefore critical that you establish all the terms of a mortgage when considering your options. Contact us or call 01628 507477 for more information.
Related articles:
- What is a ‘Fixed Rate Mortgage’?
- What’s So Important About the Bank of England’s Base Rate?
- What is the LIBOR Rate and How is it Calculated?
Download our Free First Time Buyers Guide
Recent posts
Budgeting over the Christmas Period
3 days ago
The most wonderful time of the year can easily turn into the most expensive time of the year. Watching the pennies doesn’t mean that the Christmas festivities have to stop, following a few budgeting tips can mean you still have a special Christmas and don’t go into the new year in debt.
Preparing your home to sell in winter
7 days ago
December is usually a less desirable time to buy as many people don’t want to move over the holidays. However, prospective buyers do start to look at this time. Selling your home in winter may require a bit of extra attention to showcase your property at its best.
We look at why mortgage rates increased following the Bank of England's choice to reduce the bank rate, and should you fix now?
UK 2024 Autumn Budget: Housing
30 Oct 2024
On 30th October 2024 the Chancellor, Rachel Reeves delivered the Autumn budget which we had previously been warned would be “difficult”. Below we have summarised the main housing points.
Talking about money with kids
23 Oct 2024
In an increasingly cashless society, money is an intangible concept for children to grasp. In the days of coins and notes, kids could see money as something physical you require to purchase goods and services.
In order to help teach your children about money, we have listed some tips below;
Labour Autumn Budget Predictions: Housing
18 Oct 2024
The UK’s chancellor, Rachel Reeves will deliver the Labour government’s autumn budget at the end of the month, we take a look at what could be announced in relation to housing.
Recent research from Halifax has revealed the most sought-after locations for first time buyers in Britain.
The data which was taken from the Halifax House Price Index looked at areas outside of London where those looking to purchase their first property were buying. Despite high property prices and increased rates, these first time buyer hotspots have remained popular.
How can I look after my mental health?
7 Oct 2024
Taking care of your mental health means looking after your emotional, psychological, and social wellbeing. There are several ways we can practice self-care that will help to improve our physical and mental health. This can help to reduce our risk of illness, manage stress, and boost our energy levels!
More information
Trusted by
