13 Feb

SVR reductions 'giving borrowers breathing room'

SVR reductions 'giving borrowers breathing room'

Borrowers who cannot afford to remortgage are being helped by reductions in standard variable rates (SVRs), it has been noted.

Bilal Afzal, mortgage adviser at Surrey Independent Financial Services, explained that low rates are benefiting those who face the prospect of negative equity.

He noted that base rate reductions have prompted the moves, giving "a bit of breathing space" to homeowners.

"People are coming out of their initial promotional rate and finding themselves having to pay even less due to lower SVR by their lenders," Mr Afzal added.

And he suggested that this benefits those who have less than 25 per cent equity, as such borrowers could find it difficult to find fixed or tracker mortgages.

His comments follow the publication of the Financial Services Authority's Financial Risk Outlook, which estimated that over 2.5 million people will be in negative equity if house prices fall by 30 per cent compared to levels at the end of 2007.

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