Standard Variable Rate Mortgage Payers in For a Nasty Surprise

In my book “Successful Property Letting” I say..... “I also like tracker mortgages. With these, there is a guarantee that the mortgage rate will never be more than a set amount above the central bank (Bank of England) base rate.
If the rate is not linked to the central bank rate, the company will be free to set any rate and call that “the standard variable rate (SVR)” This might be uncompetitive, and if you’re tied in, you may be stuck on a very uncompetitive rate indeed.”
Well folks, as the credit crunch gets worse, the poor fools who did not heed that advice and took out mortgages linked to the lender’s SVR are now seeing their mortgages go up straight away. Abbey have raised their rates today.
The message is clear - always link to bank of England base rate not some woolly SVR.

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http://www.lettingfocus.com/pages/myarticles_guaranteed_rent.html

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