40,000 Halifax mortgage holders at risk of payment hike
Around 40,000 borrowers face the threat of higher mortgage costs after Halifax raised a cap for some on a standard variable rate (SVR).
Those affected currently pay 3.5% as the SVR is capped at 3% above the Bank of England base rate, which stands at 0.5%.
The new limit, which comes into force on 31 March, is base rate + 3.75%. However, homeowners won't be hit by increased charges then.
Instead, the move allows the lender to increase charges should it wish, although it insists there are no plans to do so.
Ray Boulger, from mortgage broker John Charcol, says: "There would have been no point in incurring the negative PR if there were no plans to increase the SVR in the near future.
"So any borrowers currently paying 3.5% should expect an increase soon after 31 March."
Borrowers usually revert to paying an SVR when fixed deals come to an end.
Who does this affect?
Only customers who took out a mortgage between 2001 and 2007 are affected. And within that group, it only hits those who have two mortgage balances, where one is subject to an early repayment charge (ERC).
Therefore, it is most likely to affect homeowners with a long-standing Halifax mortgage on their SVR who have taken out additional borrowing, where the rate on that balance is still within the introductory period and is therefore subject to an ERC.
The 40,000 group can leave the lender before 12 June without penalty, as a result of the change.
It is the first time that Halifax has increased the SVR cap since October 2008.
Why has this happened?
A Halifax spokeswoman says letters have been sent out to customers to confirm the change in the cap.
She says: "We continually assess the many dynamic factors that impact mortgage pricing, and have reviewed the current cap level to ensure that it remains suitable in the current market conditions."
Several factors, such as the eurozone crisis and the general economic climate, have led to the decision.