Will the Bank of England keep the Base Rate at 5% tomorrow (10 July) so lenders don't increase their mortgage rates. 12 months ago, a borrower could pick select from over 15,000 mortgage products and be offered an advance of 125% of the actual property value. Most lenders now have a reduced appetite to lend, credit scoring has been adjusted to reflect a general image of today’s household expenses and borrowers require a deposit, of at least 20 and 25%, at best. The last resort for a growing number of borrowers is reverting to their lender’s standard variable rate and it is not unreasonable to predict that a majority of borrowers will be left with only this option during the next six months, if markets do not improve.

Standard variable rates (SVRs) have in the past been seen as being unfashionable and usally been associated with borrowers who have around £5,000 left on their mortgage. Hence, lenders have generally toed the line in adjusting their SVR in line with Bank Base Rate changes. Unlike other headline rates, there has not been a notable change for increased margins for risk and standard variable rates have externally been unaffected by the uncertainties of swap and LIBOR rates.

Subsequent to the Base Rate reducing to 5% in April, 38 lenders did not pass on the full 0.25% cut and 15 of these lenders did not reduce their SVR at all.