If you have sufficient credit there is actually no reason that you should pay more simply because the bank demands you too. Those do not have a mortgage with one of the banks that just increase their rates should not get too smug, because unless you have one of the many fixed mortgages products, you may be next.

In fact, anyone with a SVR may be next as many other banks and building societies plan to follow suit next including big lending agents Co-op and Yorkshire Bank.  In fact, experts predict that by the end of the year most people on SVRs will see their rates increase back up.

While an increase of .5% likely is not going to seem like much at first glance, it certainly is not going to result in one of the best mortgage rates, and it is going to do more damage to a household budget then it will seem too at first.

This is due to the fact that the average homeowner is going to see about £40-£50 added to their mortgage payment each month, and by the end of the year that will add up to additional costs of about £480- £600.  At this point it is easier to see how the slight increase can really start to stretch a budget.

The good news is that homeowners that have at least 15% equity in their home do have another choice: to shop around for another mortgage product.  While you will to be careful about termination fees and new product fees, if you are diligent in your efforts to find a new deal it is possible to get locked into a lower rate fixed product.

Bear in mind that even if the fixed product is a bit higher than you are paying now, it will protect you against future SVR hikes and if the mortgage market remains unstable it is likely that these are coming in the future.

The fact that it is the banks’ fault that the economy collapsed in the first place is an ethical qualm that does not seem to be bothering the lenders’ conscious. Almost a million people are suffering now from the Halifax standard variable rate increase and thousands more are affected by the other banking agents that have increased their SVRs.

It is expected that close to two million will be affected by next month as other banks and major lenders plan to follow suit.  Even building societies are likely to increase their rates as well impacting thousands more.  In fact, only those with fixed mortgages will be safe over the coming months as the rates are expected to increase across the board despite the fact that the Bank of England interest rate remains unchanged.

The lenders claim that they have been forced to increase their mortgage rates due to an increase in the costs of mortgage funding. This can be hard for the average borrower to understand as their mortgages were taken out years ago and it can be hard to comprehend how the price could suddenly increase on an old mortgage.

The reason why is because banks have to balance their books on a regular basis and therefore the costs of SRVs and trackers are balanced out against the costs of funding available on the open market. Therefore, even though a mortgage can be over five years old, the lender has to balance what is left outstanding on their books at the close of the day and eventually the costs of all the mortgages they have open needs to be funded.

While it may seem that the banks owe their customers a favor, now that the financial authorities are loosening up on the banks they have the freedom to do what they want, and the result is that they are right back to their previous position of essentially kicking customers when they are down for their own benefit.

The best way to approach the problem is by taking at look at what fixed mortgages other lenders can offer you due to the fact that you will not know what your options are until you actually take a look at what your options are.  The best way to do this is by talking to major lenders and also to independent brokers to see what they have to offer.  There are going to be some fees associated with changing mortgagee deals and it is important that you take this into consideration when you consider how much you will save with the new deal.

After all, if you have to pay a large amount of fees in order to switch your mortgage deal then the amount that you save may not make it actually one of the best mortgage rates on the market.  Another thing you will have to check out is if you will be forced to pay ‘exit fees’ in order to leave your current lender and get off of the SVR.  Once again, adding on these extra fees can change how good of a deal you can actually get.

Another thing to consider is if you plan on paying off your mortgage faster by making larger payments here and there on your mortgage.  If you can afford it this is a great plan and if you stay on an SVR there are usually not any penalties, but if you switch to a fixed mortgage you may end up paying early repayment fees which will make the switch not worth it in the long run.  Finally, bear in mind that with the drop in property prices if you are in negative equity then you may not actually have a choice or will have limited options so be careful before making any quick moves.

All of the major high street lenders that increased their mortgage rates have been hit by harsh criticism due to the fact that the Bank of England has not altered the base rate from its historical low therefore making it seem unreasonable that the SVRs should go up.  Which? did a survey that showed that homeowners are very worried about the increase in their monthly payments with most reporting that they were in fact ‘devastating’ leaving them with a large increase in their monthly budget that will not be matched by any extra income.  In fact, inflation without an increase in wages makes the situation even more deadly for homeowners.

For a customer that currently has a home mortgage loan of about £150,000 which is considered average the Halifax increase would cause them to owe another £40 every month.  This is the result of Halifax increasing its SVR mortgage rate up to 3.99% from 3.5% which will hurt another three million customers.  Given the fact that the bank was rescued and bailed out by taxpayers in 2008 the harsh reality is raising a great deal of concern among public defenders who believe that the bank should have to be morally responsible to its customers who helped them out of trouble.

According to Chief Executive of Which? Peter Vicary-Smith one out of every seven customers is already having a hard time making their monthly mortgage repayments and the increase may very well put many of them into foreclosure.  Those who will lose the most are those that will not be able to switch their loan to another bank because of poor credit or high required LTVs making them effectively forced to pay the higher SVR even if there are better deals for them available out there on the market.

Over the last month many high street lenders including RBS, Halifax, and more have announced that their SVRs would be increased as a result of higher lending costs.  This has left many homeowners nervous about the 0.5% increase that could make their mortgages a bit unaffordable as it will tighten their monthly budgets.

However, Coventry is slashing prices for those that make the move now perhaps in an effort to take advantage of homeowners that want to get from under the impending SVR increase.  Coventry has reduced their two year and five year fixed mortgages for those that are interested in the security of having a fixed rate in the coming months when the mortgage market starts to fluctuate.

Their two year fixed rate is now down to 3.18% instead of 3.48% and their five year product will now be available for 3.89% instead of 3.99%.  Both of these products come with LTVs as low as 65% and with an attached £800 arrangement fee and £199 booking fee.

At the same time, for those that are willing to pay higher fees, the building society is also offering buy to let mortgage rates that are discounted as well.  The rate is available to landlords that have at least a 65% LTV and can afford a £1,249 arrangement fee and a £250 booking fee.  The rate decrease for this loan is a drop from 4.25% down to 3.99%.

For landlords with a high property portfolio the interest rate cut can make a substantial difference in monthly payments making the fees a bit more reasonable.

Marketing and sales director for Coventry Building Society, Colin Franklin, stated that borrowers can enjoy some peace of mind with these new fixed offers and still receive an interest rate that is competitive in the open market.  The mortgages can be applied for by interested parties online, at a physical branch, or over the phone.  They will only be available for a limited amount of time or until the bank reaches its lending cap on the deals.

However, now that we are into the second half of a, new year experts are stepping back from the panic position for awhile stating that without marked improvement in the UK economy it is likely that the base rate will not increase until at least the start of 2014.

Most experts predicted that it would be the beginning of 2012 or at least a few months into the year before the interest rate increased, and thus advised mortgage clients to consider fixed mortgages to protect themselves from harsh mortgage rates that would make their homes unaffordable.

Now fund managers, economists, and mortgage market experts are stepping back a bit from their call of warning predicting that the base rate is going to remain low until 2014 rolls around changing the face of the mortgage market.

Some experts are even predicting that due to the poor economic recovery the base interest rate may stay down at 0.5% for the next three to five years.  The poor economy is blamed for the low interest rate, and it seems that even the recent rise in inflation seen over March will not be enough to shake the low rate.

Although the small increase in the CPI may have caused a brief flutter of concern financial experts believe that there still will not be enough of a shift making those without fixed mortgages still safe for the time being.

Chief economist at Nationwide Building Society, Robert Gardner, stated that the economic data is too volatile for the MPC to actually be able to see if the economy is strengthening any and added that the volatility will only be exaggerated even more during the diamond jubilee and the 2012 Olympics.

He added that the Bank of England is going to likely wait for a reasonable amount of time even if the economy seems to be recovering to make sure that the growth is gaining momentum before they do anything major such as increase interest rates.

The news that the Co-Operative Bank has also decided to increase their SVR rates is not surprising and, as it is the fifth lender to do so at this point, it is a clear indication that most homeowners can expect to see their SVR increase over the next few months if it has not yet done so.

The truth is that actual costs of lending are starting to fall a bit but this has not stopped greedy banks from claiming otherwise and hiking their fees leaving homeowners to struggle with higher mortgage rates that may make the household budget just a bit more unbearable than they can handle.

Even more shocking is the fact that the major banks have the nerve to increase their rates given the fact that the Bank of England base rate is still sitting at its historical low of 0.5%.  Those with Co-Operative for example will see their rate jump up to 4.74% come the 1^st May.

Overall, this figure means that homeowners will be paying a mortgage rate that is 0.5% more than they are accustomed to if they are on an SVR. The figure sounds low enough, but what this means its that a homeowner that is still paying on a mortgage with around £100,000 let will end up paying about £27 more per month.

This adds up to more than £324 more a year on their mortgage.  If the amount left on a mortgage is higher, the amount extra they will pay per year will also add up to more. Taxpayers who bailed out the banks are angered by the rate hikes, and rightfully so as the banking system just received £375bn from the Bank of England not to mention the various bailouts. At the same time, the interbank lending interest rate has fallen down to 0.6% from 1.03% making the excuse that the costs of lending are higher for banks invalid also.

Consumer Action Group member Marc Gander, stated that this is basically a slap in the face for homeowners that bailed out some of the larger banks such as RBS and Halifax, but it is a slap that is not over yet for most. Since most banks take their cue from the larger banks it is likely that even smaller building societies will soon hike rates allowing all homeowners to feel the squeeze a bit.

The reason for this is that over the next six months landlords are going to become liable for two years’ worth of taxes and in many cases the income that they received from their properties may not be enough to cover the middle. This is due to the fact that the tax law surrounding buy to let landlords is a bit complex, while the ability to take advantage of the buy to let mortgage rates when possible was easy for those with a bit put away in the bank.

Therefore, the situation created was that those with enough equity or a bit of savings decided to jump into the rental market to take advantage of the new investment opportunity, but without proper knowledge of what they would have to pay in the future. Many of these new landlords are not millionaires or savvy investors, but lack of knowledge is not going to help them out when HM Revenue & Customs comes knocking on the door.

UHY Hacker Young partner, Geoff Davies, stated that a great deal of buy to let landlords that took advantage of the low buy to let mortgage rates and new ‘renters’ economy allowing them to profit for the tax year that ended this April. This means that the landlords could have to pay on their new profits that were earned over the last two year period, and will only have six months in which to do so.

Essentially, being of the timing of when the rates were cut and the timing of when landlords started to actually profit, most landlords are going to end up getting taxed just as they start to break even. The timing is incredibly inconvenient, but then HMRC is not really going to care about that factor since they will want their money when they want it.

As a result, landlords have better start preparing now for the heavy taxes they may find themselves slammed with very quickly otherwise they could lose what they thought they had gained.

In some areas, where the letting price is quite high, simply renting out one room may be the solution to meeting a mortgage as it would allow them to use the income from letting the room to pay for their home mortgage and still have a surplus to help loosen up the budget a bit.

Of course, how much of a benefit a letter is going to be when compared to the costs of fixed mortgages will depend on the region that the home is in as well as the tenant and the buyer expectations.

Home owners that live in regions where the house prices have fallen will likely find that they have rental surpluses whereas those in the south that are still paying higher mortgages since their properties are valued at higher prices will not find that the rental income helps as much.

The government is promoting renting a room as part of their new rent a room scheme that allows for rental income of up to £4,250 per year or £354 per month to be tax-free. Therefore, those that rent a room can help make their mortgage rates more affordable without paying any taxes on what they receive so long as they do not receive more than the scheme’s limits.

It should come as no surprise therefore that Santander reported that about one million homeowners are letting out rooms in their homes to help cover their mortgage costs. SpareRoom.co.uk did a survey that took a look at the cities and towns in the UK where homeowners could consider renting out a spare room and be able to live mortgage free taking into account the average home price in many different UK cities and towns and comparing it to the average rental unit price.

It found that the best area for covering one’s mortgage with a renter is in Hull where those with a £90,000 mortgage could stand to profit by about £1000 if they charged about £341 per month for the rental. Other top areas include Manchester, Blackpool, Glasgow, Stoke-on-Trent, and Belfast.

For a long time SVRs have been considered one of the lowest deals on the market and many homeowners have stuck with an SVR versus signing a new deal, but as most high street lenders continue to announce increases in their SVRs this may no longer be the case.

The latest move from the Co-operative Bank will likely affect about 54,000 home owners and will cost the average mortgage holder an additional £15 per month on their mortgage payment and about £180 more per year total. The Bank argues that they were forced to increase the SVR because of an increase in the wholesale costs of funding mortgages and the overall changes that have been taking place in the mortgage market for the last few months.

It also claims that because more customers are now choosing fixed mortgages that are set for lengthy terms it must recoup the costs of these deals by charging more for its standard mortgage products. The Co-op is not alone in choosing to increase mortgage rates as many lenders on the high street, in particular Halifax, RBS, and Clydesdale and Yorkshire, have all announced that they will be increasing their rates over the last few weeks.

However, the announcement by the Co-op bank has attracted more criticism due to the fact that the bank has always made a point of offering ethical banking policies to its customers. Many people feel that this latest increase will hurt homeowners that already have stretched budgets and therefore may not be the friendliest move for the bank to make.

This is due to the fact that the Co-Op should know that most mortgage holders are trapped in the mortgage market and do not have the credit or the ability to remortgage so that they can find a better deal.

The lack of equity in a home due to property prices falling is another reason why many home owners have to stick with their SVRs and increasing them could hurt customers of the Co-op very negatively. In an attempt to address this issue the Financial Services Consumer Panel has asked the FSA to create new legislation to protect customers from unfair SVR increases.