SVR hikes will cost mortgage borrowers £300m, says Which?

Co-operative Bank, Halifax and Clydesdale and Yorkshire Banks all increase their SVRs today, with Which? estimating it will cost consumers an additional £300m in mortgage repayments over the next year.

The Co-operative Bank is raising its standard variable mortgage rate by 0.5%, from 4.24% to 4.74%, while Halifax is increasing its SVR from 3.5% to 3.99%, and Yorkshire and Clydesdale Banks from 4.59% to 4.95%.

Research from Which? reveals 70% of mortgage-holders are concerned about an increase in interest rates.  

Some 14% say they are already struggling with repayments. The greatest impact of these latest rises will be felt by mortgage prisoners who are unable to move to another provider.

Three quarters of mortgage-holders say they would be affected if their repayments increased by £50 a month, with 41% saying they would need to cut back on regular spending, 20% would need to reducing savings and 11% would not have enough for essentials.

An increase of £100 a month would see 20% of mortgage-holders not having enough for daily essentials like food and 11% being unable to pay their mortgage. Consumers also highlighted the emotional impact of increases in mortgage repayments, describing them as “devastating” and “a disaster”.

Peter Vicary-Smith, chief executive of Which?, says: “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. This is why the new financial regulator, the FCA, needs to be a watchdog not a lapdog. It must stand up for consumers and stand up to the banks.”

Which? wants lenders and the Financial Services Authority to do more to protect consumers against unjustified interest rate rises and ensure that consumers are offered the ability to fix their payments at a reasonable level.

Good news for First Time Buyers!

Scottish Government annouces more funding for the Open Market scheme

What is the Open Market Shared Equity scheme?

The Open Market Shared Equity scheme allows people on low to moderate incomes to buy homes that are for sale on the open market where it is affordable for them to do so. The scheme is open to priority group applicants which include social renters (in other words, people who rent a property from either a local authority or a housing association), disabled people, members of the armed forces, veterans who have left the armed forces within the past year, and widows, widowers and other partners of service personnel.

How the scheme operates

The minimum equity stake that buyers must take in a property is 60 per cent and the maximum equity stake is 90 per cent. Lenders normally require buyers to provide a modest deposit.
Applications to the scheme are assessed by registered social landlords who administer the scheme on behalf of the Scottish Government. Registered social landlords will undertake a detailed financial assessment of individual household circumstances using certain criteria, such as looking at the disposable income the household has. This information will be obtained from the standard application form which applicants to the scheme must complete.
There are limits set on the price of homes that can be bought under the open market scheme to ensure that only 'starter' properties are available through the scheme - these are known as threshold prices. These limits vary according to house prices in different parts of Scotland, called threshold price areas, and are reviewed regularly. You can find out these limits and details of the registered social landlords that operate the scheme in each of the scheme's eight administrative areas through the links below. You can see which threshold price area covers the region in which you wish to buy on a map.

• East
• Eilean Siar
• Grampian
• Highland
• Orkney Islands
• Shetland Islands
• Tayside & Forth Valley
• West

An information leaflet for applicants is available.

Buying your newly built home - the NewBuy scheme

If you’re having difficulty raising the deposit needed to buy your new build home, you may qualify for the NewBuy scheme. It can get help you get a mortgage of up to 95 per cent of the purchase price. Find out more about the scheme and how to apply.

The NewBuy scheme - what it is

The NewBuy scheme helps people get a mortgage of up to 95 per cent of the purchase price. The scheme applies to new builds (flats and houses) and is available from participating builders in England only.
You will still need to have a deposit of at least five per cent of the price of your home.

How does the NewBuy scheme work?

If you would like to buy a new build property and you have at least five per cent deposit of the purchase price saved as a deposit, you can contact DL Financial Services to discuss your eligibility for the NewBuy scheme.
Your mortgage application for the NewBuy scheme will be assessed in the same way as any normal mortgage application.
If you meet the lender's affordability and credit criteria, and you qualify under the guidelines, you could be eligible for a loan of up to 95 per cent of the purchase price.
To find out more about the scheme and search for developers in your area, go to the NewBuy scheme website.

• NewBuy scheme website - what to do next Opens new window

How do I qualify?

To quality for NewBuy, you must be a UK citizen or have the right to remain indefinitely in the country.
NewBuy properties must be:

• new build - residential properties being sold for the first time or for the first time in the current form
• priced up to £500,000 - but there will be no cap on income
• full ownership – NewBuy is not available for shared ownership or shared equity purchases
• primary homes – NewBuy will not be available for the purchase of second homes or for buy-to-let purchases

You cannot use NewBuy together with any other publicly funded mortgage scheme.
NewBuy does not apply to interest-only mortgages.

How does a mortgage indemnity work under the NewBuy scheme?

A mortgage indemnity protects your mortgage lender, if you fall behind with your mortgage payments, and the lender has to repossess the property and sell it.
This can result in a loss to the lender if the property has to be sold for a value lower than the remaining value of the mortgage.
Under the NewBuy scheme, the home builder puts aside a certain amount of the sale price into a special indemnity fund that’s guaranteed by government.
If your property is repossessed and sold for less than the amount of the outstanding mortgage debt, the lender can claim on the mortgage indemnity to recover some of its loss.
Having an indemnity does not give you additional protection from repossession. Also, it does not protect you from negative equity or a shortfall between the sale price and the outstanding debt.
In the event of your home being repossessed, you will still be responsible for repaying any shortfall between the sale price of the property and the outstanding mortgage debt.

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