In the last 2 months many building societies have taken the decision to raise their Standard Variable Rate (SVR), the average SVR is now in and around 4.8% with a number of societies edging above the 5% mark. So as more and more building societies raise their (SVR) is this the start of a new era of remortgaging?

For over a year now homeowners have been happy to sit on the SVR of their lender as it represented a good deal without the hassle of finding a lender who was willing to offer them a mortgage and it suited those homeowners with only a small amount of equity.

In the last two week alone, Norwich and Peterborough Building Society have raised their SVR to 5.35%, Holmesdale Building Society increased theirs to 4.89% and Mansfield, Marsden, Kent Reliance, Cambridge and Skipton building societies have all announced that their SVRs are going up. A number of societies had already moved theirs and it is predicted that more will follow suit.

The reason for this move in SVR is that the building society sector is finding it harder to attract liquidity in the form of savings as the savings rates are so woeful at present due to the historically low Bank of England Base Rate. They are therefore using this increase in SVR to make more money from their mortgage customers.

Building societies were always a place to save but according to the Building Society Association in 2009, savers withdrew £7.6billion more than they deposited. This has prompted a bit of a cash crisis. If they cannot attract savers they are left with little option but to increase their SVR.

Malcolm Murphy the Business Development Manager at www.thebestbestbuys.com said, “There are now many deals available on the market that are more attractive than the Standard Variable Rate of building societies but these only suit customers that have a large amount of equity as most of the best buy mortgage products require a deposit of around 30 or 40%”

According to Moneyfacts the financial data company more mortgages are now coming on to the market than they have seen in the last 12 months. This indicates that financial institutions are becoming more willing to lend. What we now require to see is an increase in the Loan to Value (LTV) ratios that these institutions are willing to lend at.

At the end of 2009 and into the beginning of 2010 the Newcastle Building society was offering market leading rates with an LTV of 80%. In this week’s mortgage best buy tables Leek Building Society are offering a discount variable mortgage with an initial interest rate of 2.95% with an LTV of 85%.

Hopefully in the coming months we will see an improvement not only in the number of mortgages available but an increase in the LTV’s on offer. Until then many mortgage customers with little equity will just have to sit tight on their lenders SVR. Those mortgage customers with greater equity should remortgage now.