20 November, 2008

It was only just over twelve months ago when if a borrower's mortgage or home owner loan arrived the end of the primary deal and reverted to the lenders standard variable rate (SVR), then they would be opt around for a new deal and the borrower's not suppose to do much struggle to find a new lender who was prepared to provide them a cheap loans UK than their existing one.

The lenders standard variable rate was reserved for those individuals who were not able to attain a better deal from an alternative lender, or the default option for someone seeking for a new secured loan, who could not qualify for a better UK loans deal.

Since the Bank of England diminished the base rate of interest over the last couple of months and the vast majority of banks and building societies have been strained by the Government to cut their SVR's accordingly, these have now become some of the most competitive deals on the market.

However, for existing borrowers, whose primary secured loan deal has now ended and the product has reverted to the SVR, there is little point looking around for a new deal of UK loans, as their existing loan may possibly gets cheaper than any remortgage product accessible elsewhere on the market, often with interest rates in the region of as low as 5 per cent.

Meanwhile, for many people who are planning for a new home owner loan, these SVR products are no longer accessible because a large number of lenders have made this rate occupied for new UK loans.

For those lenders who are still providing the SVR to new borrowers, in many cases they are charging expensive fees and also high redemption penalties, which raise the whole cost of the loan and withdraw the advantage if entailing a cheaper interest rate. Around 40 per cent of lenders now charge an arrangement fee on their SVR home owner loans and 88 per cent charge redemption penalties.