Homeowners cannot be able to benefit from low rates despite base rates of 0.5%

Millions of hard-pressed homeowners are failing to benefit from low interest rates as banks and building societies charge mortgage rates of up 12 times Bank of England base rate.

This has left many borrowers paying standard variable rates (SVRs) of up to 6%, even though base rates have been slashed to just 0.5%.

Instead of cutting their SVRs, lenders have been lifting them instead. High street giant Halifax recently hiked its SVR for new customers to 3.99%, up from the 3.5% paid by existing borrowers.

It isn’t the first major lender to punish borrowers in this way. Last year, Lloyds TSB and C&G hiked their SVRs for new customers to 3.99%, way above the 2.5% paid by existing customers, as Nationwide had done earlier.

Skipton building society was last year’s worst offender, lifting its SVR from 3.5% to 4.95% for all mortgage customers. This cost a borrower with a £100,000 mortgage an extra £121 a month.