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Customer revolt at Halifax over mortgage rate which will cost up to £735 per year MORE
By Sean Poulter for the Daily Mail
Updated:06:05 EST, 5 March 2012
Halifax faces a mass customer exodus after announcing an increase in the mortgage rate for 850,000 families that will cost them hundreds of pounds a year.
The bank is increasing its standard variable rate from 3.5 per cent to 3.99 per cent from May 1.
Halifax, which is one of the UK’s biggest mortgage lenders, brought in extra call centre staff yesterday to deal with angry and worried customers.
Scroll down for a full table of the changes
Several disgruntled Halifax customers could swap banks with their mortgages set to rise
The bank is among a number of finance giants that owe their survival to the support of taxpayers following the 2008 financial crash.
As part of the fallout from the crisis, Halifax was taken over by Lloyds, which is some 40 per cent owned by the taxpayer.
Mortgage brokers expect thousands of Halifax customers to switch to a new lender to minimise the impact of the rate rise.
But thousands with little equity in their homes will find it very hard to move their mortgage, leaving them no choice but to pay the extra.
The Halifax SVR increase means that a housebuyer with a £100,000 repayment mortgage will see the cost jump by £24.30 a month or £291.60 a year.
Repayments on a £100,000 interest-only mortgage will rise by £40.83 a month or £489.96 a year.
The increase – revealed by the Daily Mail on Saturday and confirmed by Halifax yesterday – comes despite the fact
that the Bank of England has held the base rate at a record low of 0.5 per cent for three years.
With increasing mortgages, home owners could be forced to sell if they can't afford the new payments
At the same time, families are struggling to cope with a huge cost of living squeeze.
Halifax is allowing some customers to transfer to cheaper, short-term fixed-rate home loans free of charge.
A customer borrowing 60 per cent of their home’s value can apply for a two-year fixed product at 3.49 per cent. Someone borrowing up to 75 per cent could be eligible for a two-year fix charging 3.74 per cent.
But those who have less than 25 per cent equity in their property will find it hard to move their mortgage, so will be trapped on the 3.99 per cent SVR.
The RBS-NatWest group, which is more than 80 per cent owned by the taxpayer, is increasing the mortgage rate charged to 200,000 customers by 0.25 of a percentage point to 4 per cent.
Ray Boulger, of broker John Charcol, said: ‘The rate rise will be a big catalyst for Halifax borrowers to review their options, and a large proportion of the lender’s book will be up for grabs. This represents a huge remortgage opportunity for brokers.’
Halifax said the SVR is going up because the cost of borrowing money on international markets has risen. It is also having to pay higher interest rates to its savers.
Typical SVRs for the biggest lenders
Category: Mortgage calculator