Bloomberg News

Halifax Raises SVR to 3.99%, RBS and Santander Boost Pricing

March 04, 2012

Lloyds Bank Group Plc’s Halifax (HFX) unit, the U.K.’s largest mortgage lender, said today it is raising its standard variable rate by 0.49 percentage point to account for higher funding costs after the European debt crisis.

“Following a review of our variable mortgage interest rates, also known as lender variable rates, we are increasing the Halifax Standard Variable Rate from 3.50 percent to 3.99 percent from May 1,” the company said in a statement on its website. The increase “is due to the increased cost to us in raising the money we lend to our customers.”

The Bank of England forecast in January that U.K. lenders would toughen criteria on loans to households in the first quarter due to strains in wholesale funding markets. Tighter wholesale funding conditions and the economic outlook were expected to restrict credit availability, the central bank said in its fourth-quarter Credit Conditions Survey published Jan. 5.

Lenders must pay an average 127 basis points, or 1.27 percentage point, more than the Bank of England base rate for deposits compared with 118 basis points below that benchmark before 2007, Halifax said in an e-mailed statement today. The cost of issuing a three-year note last month was 175 basis points more than the three-month London interbank offered rate, up from 11 basis points more than Libor for a four-year securitization bond in 2006, Halifax said.

16 Pounds

On average, Halifax’s 850,000 customers with mortgages on the standard variable rate will see their monthly repayments increase by about 16 pounds, assuming a current balance of 67,500 pounds, according to the statement.

Royal Bank of Scotland Group Plc yesterday said it increased the rate on two of its non-SVR mortgage products called Offset and The One Account by 0.25 percent to 4 percent for new and existing customers. RBS’s SVR has not been changed and remains at 4 percent, it added in the e-mailed statement.

Banco Santander SA (SAN) has also increased the rate new customers will pay on four mortgages it offers through its “Abbey For Intermediaries” product line due to higher funding costs, according to London-based spokesman Andy Smith. The Madrid-based bank’s SVR will remain the same, he said.

The rate on Santander’s two-year fixed 65 percent and 75 percent mortgages and two-year tracker 65 percent and 75 percent mortgages will rise 10 basis points, Smith said by phone today.

To contact the reporter on this story: Stephen Morris in London at smorris39@bloomberg.net.

To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net.


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