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Questions about Standard Variable Rates changes (As at 28 February 2010)

This Q&A section featured on www.skipton.co.uk in February 2010 and explains to customers the reasons behind our decision to remove the guaranteed link to Bank Base Rate that we had applied on our Standard Variable Rates (SVR) up to that time. Please note that the wording is exactly as published then and, as such, some of the information will no longer be correct or applicable.

Standard Variable Rates

We have compiled a list of the most commonly asked questions along with their answers, about our Standard Variable Rates (SVR). Before reading please take note of the following:

  • These questions and answers relate only to mortgages linked to the Residential Standard Variable Rate (RSVR) and Buy to Let Standard Variable Rate (BSVR). As our RSVR and BSVR are currently set at the same level, where, in the remainder of this section, we refer to SVR, this relates to both of them.
  • If you have questions about mortgages linked to Commercial Standard Variable Rate (CSVR), please contact us directly.
  • If your current mortgage product did not have the benefit of the ceiling, you may find some of these questions and answers helpful, but please remember you did not have the benefit of the ceiling.
  • If your current mortgage product is not linked to a Standard Variable Rate (SVR) and never will be, these questions are not relevant to you.

To reveal the answer please click on the question, the text will then expand.

You could lose your home if you don’t keep up your mortgage repayments.

Frequently asked questions

An SVR is an interest rate that is set by a lender and is not linked directly to an independent external rate such as the Bank of England's Base Rate (Base Rate).

Skipton has different SVRs. One is for Residential mortgages (the Residential SVR or RSVR) and one is for Buy to Let mortgages (the Buy to Let SVR or BSVR).

The different rates reflect the risks associated with different types of mortgages. Historically, these rates have been different, though the RSVR and BSVR are currently both set at 3.50% (rates correct at 28 February 2010). These rates may, in the future, be set at different levels.

Please note, our SVRs include a 0.25% discount for borrowers who pay by Direct Debit.

If you have any questions about the rate you are paying or about our SVRs, please contact us.

his is a term that was introduced in 2002 for some Skipton borrowers so that the Society's SVR would not be more than 3% above Base Rate. If the term imposing the SVR ceiling applied to you, this was set out in your mortgage documentation.

Historically, Skipton has maintained its SVR at a competitive level of 1% to 2% above Base Rate, so the SVR has remained comfortably below its ceiling. However, when the Bank of England reduced Base Rate to the current historic low of 0.5%, the ceiling prevented us from keeping our SVR in line with the market. As a result, our SVR has now remained far below market norms for building societies for almost a year.

The term that imposed the ceiling also gave us the right to remove it in exceptional circumstances. As explained in more detail below, the present circumstances are truly exceptional and we have therefore decided to exercise our right to remove the ceiling. This will enable us to realign our rate with the market.

Skipton's current SVR is significantly lower than the SVRs of many other building societies and banks.

Skipton's new SVR (from 1 March 2010) will still be below the average SVR of the top 10 UK building societies, which is currently 5.12%.

With effect from 1 March 2010, the Society's SVR will increase to 4.95% or 5.20% for those who do not pay by Direct Debit. This is an increase of 1.45%, which will apply to all our SVRs but, as in the past, there is no guarantee that our various SVRs will change in line with each other in future.

For details of the Society’s current SVR, or the rate you are paying please contact us.

The SVR ceiling will be removed with effect from 1 March 2010. at which time the SVR will increase to 4.95%. Any monthly payments affected will change from the March payment onwards.

Yes. If your mortgage documentation states that the SVR ceiling applies then it also clearly states that, in exceptional circumstances, the Society can remove the ceiling by giving you not less than 30 days' notice of our intention to do so.

The circumstances currently prevailing are exceptional under each of two separate tests, which have recently been defined by the Society's Board as follows:

  1. Base Rate is less than or equal to 2.7%; or
  2. Base Rate minus the UK average Branch Easy Access savings rate (as published monthly by the Bank of England) is less than or equal to 2.5% for each of the three preceding months.

The circumstances will remain exceptional for as long as either one of these tests continues to be satisfied.

It is impossible to predict when the markets and economy will return to normality. However, based on the current market view on rates, we anticipate that the present exceptional circumstances, as defined by the two tests in Question 7, will persist throughout 2010 and 2011. They may even prevail for longer.

Our borrowers can rest assured that we will monitor developments very closely. Whilst we are not under any contractual obligation to do so, we will voluntarily reintroduce the ceiling when exceptional circumstances have ceased to apply.

Check whether exceptional circumstances apply.

In line with our mutual ethos, we have done our best to protect our borrowers and our savers from the recession and the impact of historically low interest rates, for as long as possible.

Over the past year. We have consistently paid our savers attractive rates whilst maintaining a very low SVR.

However, with the current exceptional circumstances now forecast to continue for some while longer, the Board, which has a duty to act in the long term best interest of all our members, decided to realign our SVR with the market.

We have written to all of our borrowers to advise them if, and when, they will be affected by this change. This letter will explain any changes to monthly payments and what options are available to you.

You are affected by the increase in our SVR either if your mortgage, or an element of it, is linked to SVR or if it will revert to SVR in the future (eg if you have a fixed rate product with a set term).

If your mortgage is currently on SVR, the rate payable will increase by 1.45% with effect from 1 March 2010 and your monthly payment will increase accordingly.

If your mortgage will revert to SVR in the future and the circumstances remain exceptional at the time when it does so, then the ceiling will not apply to the SVR you pay at that time.

In either case, we will reintroduce the ceiling when the circumstances cease to be exceptional (see Question 8).

If you are unsure what type of product you have, you can refer to your mortgage offer or contact us on 0345 850 1711.

We always advise borrowers taking out a mortgage to ensure they are able to cope with the impact of any increase in interest rates.

However, we recognise that individual circumstances may have changed and therefore we have a range of options in place to help where the impact of this increase in payments may cause financial difficulty.

This is in-keeping with our strong track record of business with our customers to identify personalised solutions to meet their individual needs. For example, we might consider restructuring all or part of your mortgage to make your payments more manageable if this is appropriate. If you would like to discuss your options please contact us on 0345 850 1711.

If you have made an arrangement to make a fixed monthly payment that exceeds the required payment, you will continue to pay the same fixed monthly payment after the SVR is increased – except where the amount you are paying falls short of the new minimum monthly payment. So, for example, if you have set up a fixed monthly payment of £400, £200 of which is currently an overpayment, the overpayment will reduce. Therefore, you may wish to consider increasing your monthly payment to maintain overpayments at the same level.

If you had previously made an arrangement to overpay a fixed additional amount over and above the minimum monthly payment, this additional amount will remain the same and your total monthly payment increased in line with the SVR change. If you do not want this to happen please contact us on 0345 850 1711.

If you have an arrangement that has been agreed by us, this will remain in place and your monthly payment will remain the same, however the size of the monthly shortfall will increase and this will result in additional interest charges. If you wish to discuss details of your payment arrangements, please contact us on 0345 850 1711.

Your Skipton mortgage allows you to take payment holidays if you have overpaid. As long as you have no arrears and the surplus amount is sufficient to cover the period of the payment holiday, you may take a payment break of up to three consecutive months. This can be done twice in any 12 month period. Whilst you do not need to make payments during the payment holiday, interest will continue to be added to your account and your balance will increase.

Not at all. The Skipton Building Society Group is profitable and well capitalised. However, with Base Rate expected to remain low for some considerable time, it is prudent for us to take action now to enable us to continue balancing the needs of our borrowers and our savers for the long term.

This will not happen automatically. However, when an MPPI policy is first set up, the cover is calculated using the SVR in force at the time. For the majority of our borrowers, the SVR used will have been higher than our new SVR from 1 March 2010, in which case the cover should remain adequate for your increased monthly payments. If you think you need to review your MPPI cover, please contact us.

No. If your monthly payments increase your mortgage term will remain unchanged. If you wish to change the length of your mortgage term, you can request to change it .

Skipton has a strong track record of providing our borrowers and savers with long-term good value and we have continued to offer our savers attractive rates despite Base Rate remaining at a 315 year low of 0.5% since March 2009.

This change to our SVR was made to ensure we are able to maintain our ongoing commitment to act in the best interests of all our members as we have done throughout our 160 year history.

Annual mortgage statements are posted to all our borrowers each January. Skipton borrowers should have recently received your 2014 statement, which details the mortgage balance as at 31 December. If you wish to repay your mortgage in full however, you will need to request a redemption statement

Yes. As a responsible business, we were in regular dialogue with the regulator at the time, the FSA.

Yes. You can rest assured that we will monitor developments very closely and will voluntarily reintroduce the SVR ceiling when the current exceptional circumstances no longer prevail. We will write to inform affected borrowers when this occurs.

In the meantime, you can check the performance of the exceptional circumstances.

As stated in Questions 8 and 21, though we are not under any contractual obligation to do so, we will voluntarily reintroduce the SVR ceiling when the current exceptional circumstances cease.

Yes, if exceptional circumstances ever arose again. These may be different exceptional circumstances to those currently prevailing.

We have made every effort to explain clearly what is happening and why. Whilst we acknowledge that any increase in your mortgage payment will be unwelcome, we believe that our actions, which are in the long term best interests of all our members, should not have left you with grounds for complaint.

If, however, you wish to discuss these changes, please contact us on 0345 850 1711.

In the event that you remain dissatisfied, Skipton Building Society has an internal complaints procedure. You can register a complaint over the telephone, on this website or by writing to: 

Customer Relations Department,
Principal Office,
Skipton,
North Yorkshire,
BD23 1DN.

Your complaint, once registered, will be acknowledged or resolved within five business days. We aim to investigate and respond to your concerns within four weeks and, if appropriate, a final decision will be reached within eight weeks.

You also have the right to refer your complaint to the Financial Ombudsman Service (FOS) if you are dissatisfied with the Society's response. FOS will only consider your complaint if you have already given us the opportunity to resolve it.

Need help?

Call us

If you need more help one of our friendly members of staff would be happy to assist.

0345 850 1755

Jargon Explained

Bank of England Base Rate (BoEBR)

This is the rate which is set by the Monetary Policy Committee (MPC) of the Bank of England and influences the rates banks and building societies charge customers to borrow money.

Mortgage Term

Your mortgage term is the amount of time between the date you take out your mortgage and the date by which it has to be repaid in full to the lender.