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Every
mortgage
lender has a standard
variable rate, or SVR, of interest on which it bases
all its mortgage deals.
The standard variable rate is, in turn, based on the Bank
of England's base lending rate and this is decided
at monthly meetings of the Bank's monetary policy committee,
or MPC.
Every time the MPC raises its rate, mortgage lenders race to
increase their standard variable rates, generally by the same
amount.
And every time the MPC lowers its rate, the lenders do too
only often not so quickly!
But that doesn't mean mortgage lenders charge the same as the Bank of England.
• Mainstream lenders
These
are banks, building societies and other financial institutions
which target customers with reasonable credit ratings generally
set their standard variable rates at about 2 percentage points
above the Bank of England's base lending rate.
This means if the base lending rate is 5.5 per cent, most SVRs
will be around 7.5 per cent.
But some lenders will set theirs higher, while others, who are
trying to increase their customer base, might go a bit lower.
• Impaired credit lenders
who specialise in lending to customers with poor credit histories tend to set their standard variable rates far higher, arguing
that this is only fair since they are taking a much greater
risk.
But if you have a reasonable credit history, there is
no reason why you should pay a costly standard variable mortgage
rate.
For more on this, see Why you should never pay a standard variable rate.
To read more on this subject please see the list below or your mortgage guide or your home buying guide
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Fixed
Rate
Variable Rate
Capped Rate
Discounted Rate
Interest
only mortgages
Interest repayment
arrangements
Choosing
a Mortgage
Different Mortgage Types
Re
Mortgages
How to Find your Mortgage
Mortgages in Principle
Guide to Buying Home in the UK
Guide to UK Home and Mortgage Insurance
Back to A to Z Mortgages UK List
Read more about Types of Mortgages
See contents of Full Mortgages Guide
See contents of Home Buyers Guide
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The
two major varieties:
Repayment
mortgages
Interest
only mortgages
Then
mix in the various:
Interest
repayment arrangements
Finally,
to cover all the different types there's a
Complete
A-Z of mortgages
All UK Mortgage types
100%
Mortgages
Base
rate Trackers
Bridging
Loans
Bad
Credit Mortgages
Buy to Let
Calculators
for Mortgages
Cashback
deals
Capped
Rate
Costs
of a Mortgage
Current
account Mortgages
Discounted
Variable Rates
Equity
Release Mortgages
Endowment
Mortgages
Expatriate Mortgages
First
Time Buyer Mortgages
Fixed
Rate Mortgages
Group
Mortgages UK
Interest
only mortgages
ISA
Mortgage
Mortgages
in principle
Muslim
Mortgages
Pension
Mortgages
Prime
Mortgages
Repayment
mortgages
Self
Employed Mortgages
Standard Variable
rate
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Mortgage
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