You are here: Property Blog » Mortgage Stuff »

Northern Rock Lowered Thier Standard Variable Rate (SVR), Which Saved Me A Small Fortune

Written by The Landlord on 23 Nov 2008

Oh man, the huge 1.5% base rate In November has been a blessing, very much like the existence of Sarah Beeny’s breasts. I’ve recently been discussing the impact of the 1.5% cut has had on my Birmingham Midshire mortgage, but I’ve yet to mention anything about my Northern Rock Mortgage. So, here goes…

When Northern Rock collapsed and became nationalised, they decided to try and encourage their existing borrowers to remortgage with other lenders by refusing to offer any mouth-watering products to those coming off a fixed rate term. Yes, Northern Rock want their borrowers to remortgage!! I guess the logic is to sell debt and build capital.

I was actually due to come off a 5.59% fixed rate deal in 2 weeks time (1st December), which meant I would have been thrown onto the gut-wrenching 7.5% (approximately) standard variable rate. My monthly repayments would have literally rocketed. Consequently, over the last few months I’ve been looking to remortgage. My mortgage broker has been searching high and low for a decent product. But with the financial market being in such a pathetic state, things were suddenly looking rather misty. The average BTL mortgage is between 6-7%, and there’s a huge product fee on top of that. I was preparing to swallow the harsh wrath of financial reality, whilst telling my Nan to put on a thong and stand under the street lamp post!

I know most Northern Rock borrowers (including myself) were shitting themselves about coming off their fixed rate deal because they would have had to either remortgage or pay a ridiculous interest rate.

Then, to my savior, the 1.5% base rate reduction was announced by the Bank Of England. The majority of lenders notified the public that they were going to pass on the cut to their borrowers on tracker and variable mortgages. I got a letter through on Friday from Northern Rock, informing me that my new rate in December would be 5.59% and not the 7.5% rate! What a relief!! Ultimately, that means my mortgage stays the same, and I won’t have to remortgage.

I know a lot of people have been stressing about remortgaging, but if there’s any time to get thrown onto the SVR, it’s now! There’s also a lot of speculation about interest rates being slashed further in the coming months.

Has anyone else been relieved by the 1.5% cut?

Update- quick question

Does anyone know if the 1% cut that was announced yesterday (4th December) will get passed on?

Birmingham Midshire Are 2 Months Behind Passing On Interest Rate Cuts

Making Mortgage Overpayments While Debt Is Cheap

Halifax Asked Me To Review My Northern Rock Mortgage- WHAT A WASTE OF TIME

Northern Rock Want Their Borrowers To Remortgage

Northern Rock Seem Desperate To Get Me To Remortgage

Northern Rock Has Passed On A 0.25% Cut To Their Standard Variable Rate

24 Comments - join the conversation...

Fiona2008-11-24 17:13:31 Yep yep, same here .... I come off my fixed rate of 6.54? I think something like that. In feb and got a letter afew weeks ago saying i'd be going onto pay the standard variable of 7.5% But now its 5.84% which is great. So I save about £65 each month, instead of paying an extra £60+. :) 1

Badger2008-11-25 09:12:47 Well after paying 2k for a couple of months with NR my rate has come down to 5.84 from 7.34. Now the fact these guys have been badgering me to change for months now makes you wonder. if they really wanted to get rid then would have kept the rate high and forced me out. 2

The Landlord2008-11-25 09:54:30 Hey Badgey,

Yeah, I've been getting a letter through every month or so from NR, telling me to remortgage with another lender- they also provide a list of other lenders with their God awful rates! 3

ian2008-11-27 14:46:18 yes i am the most relieved person in britain i think , due to the interest rate cut, my fixed rate ends in march and i was craping it ! so the flash car maybe had to go but now i may be able to keep it !! i think that i may actually be a blessing in disguise being with northern now that they are secure. may be in a year or so they will be in the position to offer us another half decent fixed rate but beware ! the last fixed rate i got was a fucking con ! the fee was about 3k which actually worked out to be the difference between the new rate and the variable rate over the 2 years so what was the bloody point i didnt save a bean !! 4

Badger2008-11-27 15:23:58 Yes we have always got to be on our guard, i am changing at the mo to the Woolwich, happy days, they can get me another 1 % off 5

Lee2008-11-28 20:33:44 I am due to come off my fixed rate in December and NR was going to tear me a new arsehole with an increase of £300 per month. Having tried and failed to secure a new deal with another lender, I was resigned to having to stump up the extra dosh and then BINGO! The B of E dropped the interest rate and as NR is basically state owned, they had to pass on the reduction to the SVR. With rumours that rates may drop even further, I am sooo glad that I could not get a new fixed deal elsewhere, or I may have been posting me taking a Magnum to my temple on Youtube! 6

The Landlord2008-11-29 02:54:41 Hey Lee,
I was in exactly the same position as you! I was about to a total ass-raping by Northern Rock.
I was literally on the verge of signing a new mortgage deal with Nationwide. It wasn't the best deal either, but I had to do it unless I wanted to pay 7.5% interest with Northern Rock! OUCH! But then the rates dropped- what a relief.

Good stuff! :) 7

JM2008-12-04 13:58:42 But now maybe the time to look at Fixed rate deals in order to avoid the wrath when the enivitable happens and the base rate rises again :) 8

The Landlord2008-12-05 07:48:24 Anyone know if the 1% cut that was announced yesterday (4th December) will get passed on? 9

JM2008-12-05 09:30:58 Well it will onto the Tracker product (as if they have a choice) but as far as the SVR goes I believe 6 of the banks have announced they will in deed pass on the full rate drop. However, NR have been non commital as far as I am aware. 10

The Landlord2008-12-05 10:00:41 Yeah, I was watching the news carefully this morning, and NR are yet to confirm. However, because they are nationalised now, they should pass on the cut. I'm just waiting for confirmation.

Thanks 11

Champion Singh2008-12-05 13:28:30 I really do hope that NR get their fingers out once again and help this economy!

NR really did want to shaft their customers, I was told to C&G, I went through the credit check and they told me that my credit check wwas perfect but couldn't offer me a mortgage with no explanation!?? I was totally gob smacked, but thank god to Labour rates have been dropped! If they get us through this down turn my vote will certainly go to them again! 12

ian2008-12-05 13:59:05 ok guys i have been getting notifications when folks leave comments because i am interested in what is going on here. i was called this morning from the rock with them telling me how they had a panel of lenders that i could go to etc etc, i told them i wasnt interested because i know what their game plan is !!! and he says , oh really, and i said yes really, so i began to tell him that what the rock are doing is getting rid of 50% or so of there customer base so that they can be in a stronger postion when they pay back the money to the government which will allow them back in to the private sector to be able to start lending again ! so he goes on to tell my yes thats correct, the rock have already paid back or if you like bought back 60% of the shares they had to give up to the government !

so, i explained to him that when the rock are back in the private sector i would bet my ass that they will be offering the best rates on the planet to their exising borrowers ! because by that time , ie, 2 years, the company will be mega secure in their own right again. needless to say that i aint going anywhere even though i am going to pay more per month because of the end of fixed rate ,but its ok due to the base rate cuts !! so i will just sit and wait ,cheers. 13

JM2008-12-05 14:17:24 Well they were nationalised when the 0.5% drop was announced and they only passed on part of the rate cut! So I am not counting my chickens! Although I have had confirmed this morning that the Nationwide have lifted there collar rate of 2.75% and will indeed honour the base rate of 2% 14

Celena2008-12-05 15:02:28 I had the same problem, my fixed rate is at 4.99% and it ends in February and we were expecting to have to pay about £280 a month more. Due to November's cut, we will only be paying £90 more a month, which is great. I just hope they pass on this months cut as that will take the SVR lower than our current rate! I didn't know Northern Rock sent letters trying to get people to remortgage elsewhere, I knew we couldn't remortgage with them though. No point the wasting the paper on us, as due to the drop in house prices, we own less than 5% of the house now anyway and nowhere will give us a mortgage!!! 15

stevo2008-12-18 19:19:35 I have read with interest your comments regarding the rate cuts, but have yet to feel the benefits of these, I noticed some of you got your reductions on the December payment, we're not far off the January payment and I have still not had a letter telling me my rate is coming down..... I'm still on 7.48 16

Ian McCallum2008-12-19 00:37:54 stevo,. you have to give these people a call and tell them that you expect the cut to be coming your way , assuming you are about to be on the variable rate ? 17

The Landlord2008-12-19 00:40:51 Hey Stevo,
I agree with Ian. You should have heard something buy now. You should call them up and find out what is going on.

Are you on a variable or tracker mortgage for sure? If so, how long have you been on a variable/tracker rate?

Kind regards 18

JM2008-12-19 09:56:23 Hi Stevo,

Is you mortgage a together mortgage? If so, that will be why you have not had information about the rate cut. They have certainly been dragging their heels as far as implementing the base rate cuts. The new SVR as of 01.01.09 will be 5.34% but for together products NR are reducing their together SVR to 5.38% as of 01.01.09. Thereafter we should be informed of the benefit of latest 1% drop which should apply in Feb. Hope this helps 19

stevo2008-12-20 20:59:37 last half day of work on friday, I was ready for a good go with the Rock about my rates but finally received the letter when I got in, result £60 a month better off. 20

Leanne2008-12-30 14:18:38 mine only got cut by 0.5% saving me £16 a month!!!!!! 21

Steve2009-01-08 12:32:58 I was in the exact same position as you except that mine was a BTL mortgage and my broker was unable to find any lenders willing to lend to me as the LTV of the flat had increased to 90% due to the recent drop in house prices.
I was shocked by Northern Rock’s decision not to offer me any fixed rate but instead advising me to search with other lenders even though I’ve been a good customer and never missed a mortgage payment over the years.
The drop in SVR has been a Godsend and I hope it stays low and even drops further! 22

Phil2009-02-01 15:36:21 Hi, can anyone tell me whether on Northern Rock's 'standard variable rate' they can legally go on charging (in my case) 5.34% when the base rate is so low and set to go even lower?

Is there any info on whether anyone has legally challenged them to drastically reduce the monthly payments accordingly - or at least, more reasonably?

Thanks

Phil (Brighton) 23

The Landlord2009-02-01 21:43:40 Hey Phil,
The Northern Rock SVR is now 5.09- you should get a letter through shortly, informing you. I already have got my letter- I discuss it here: Northern Rock 0.25% cut.

Legally, lenders can pick and choose when they want to increase/decrease their variable rates. There's nothing anyone can do about it. However, lenders have to lower rates for those on tracker mortgages. 24