STANDARD VARIABLE

Most lenders have a standard variable rate mortgage which is the rate customers revert to, at the end of any initial deal.The clue is in the name. It’s a standard rate, which means there is nothing special about it and it can vary! The monthly payments will change anytime the lender decides to put the rate up or down. They choose when and by how much.

Most Lenders base their standard variable rate roughly on the Bank of England (BoE) Base Rate. Some lenders have attracted criticism in the past for being quick to raise rates when the BoE put them up, but are then slow to drop them when the BoE put them down.

It is an advantage to have a lender whose Standard rate exactly matches the BoE within a definite timescale. This ensures you will always be fairly treated. Though we would question why you would want to be on the standard rate in the first place?

When it came to power in 1997, the Labour Government passed responsibility for setting the Bank Base Rate from the Treasury to the Bank of England.  The Monetary Policy Committee (MPC) now sets rates.  This is a group of eight men and women from a range of financial backgrounds. When anyone is on the standard variable rate they cannot be certain of the monthly cost of the loan. If you are currently paying the standard rate you could save a considerable amount by remortgaging to a new better deal.