Why do banks introduce a standard variable rate for their mortgages? Would it not be easier just to have a base rate plus, rather than individual standard rates which are in fact anything but standard?
We already have the tool of an APR which in theory is supposed to assist in comparing the costs of finance. But it seems that nobody takes any notice because there are so many special deals and links to SVRs or fixed rates etc. I wonder if it would make life easier if banks would be forced to use only one bench mark to identify the cost of the borrowings. Either a fixed rate or a rate linked to base rate (because that would give base rate another lease of life).
What is clear is that the current system does not work. So many borrowers feel that they have been trapped by some discounted rate or by some other marketing tool and didn’t release what SVR really means. The fact that banks can change their SVR at the drop of a hat doesn’t sit right, despite the fact they are disclosed in advance.