» Interest rates will rise and homeowners will pay more

SVR's will come to an end and affect thousands

Article Published: 17th May 2012

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The Bank of England has warned that homeowners should prepare themselves for a rise in interest rates as a direct result of the problems within the Eurozone. The current crisis is driving up the cost of high street borrowing and will affect many homeowners who will need to find thousands of pounds over the year, causing many to be unable to pay back their home loan. Lenders including Halifax, Yorkshire Bank and Co-op Bank have been passing on the cost of rate increases through their standard variable rates once the fixed rate deals expire.

The Council of Mortgage Lenders say that there are around eight million homeowners on a SVR, including those on trackers with many on fixed rate deals who will need to re mortgage in the next few months. The Yorkshire Building Society raised its two-year fixed rate loan from 3.24% to 3.54% and ING Direct from 3.29% to 3.49%. The amount of repossessions from the beginning of the year to April was 9,600 and the low Bank of England interest rate has meant that repossessions have remained fairly constant. A spokesman from the CML said: ‘Effectively, the cost to the lender of borrowing money from savers has risen. ‘Also, problems in the Eurozone have been causing significant difficulties in recent months, and funding costs are higher than they were a year ago”.