Standard Variable Rate 

Accord launches discounted SVR mortgages

Accord launches discounted SVR mortgages

Accord Mortgages has added three discounted standard variable rate mortgages for borrowers looking for flexibility and competitive monthly repayments over a short period.

The mortgages, which are new to Accord's range, will offer different discounts to the lender's standard variable rate (SVR) they track, which is currently 4.99 per cent.

Each mortgage is available to house purchase and remortgage customers and comes with a £495 fee and free standard valuation.

Available at 60 per cent loan-to-value (LTV) is a two-year discounted SVR mortgage at 1.59 per cent, based on an SVR discount of 3.4 percentage points.

Borrowers with a 20 per cent deposit can opt for a 1.79 per cent rate, based on an SVR discount of 3.2 percentage points, over a two-year period.

People with a 10 per cent deposit can take advantage of a 2.09 per cent two-year deal, based on a SVR discount of 2.9 percentage points off the current 4.99 per cent SVR.

The new mortgages have an interest rate collar of 0 per cent, so if Accord's SVR reduced in the two years the variable rate would fall, but if the SVR increases, then the interest rate on the mortgages will also rise.

The discounted rates apply for the first two years of the mortgage term and will then revert to Accord's SVR - whatever that rate will be after those two years.

According to David Robinson, national intermediary sales manager for Accord, the mortgages are designed to give borrowers flexibility as they can redeem their mortgage at any time during the discounted period.

The mortgages incur a 1 per cent early repayment charge (ERC), which is less than that of Accord's typical fixed rate ERCs.

Customers can transfer their mortgage to a new property without charge.

Mr Robinson said: "We recently reduced our standard variable rate by 0.35 percentage points, so it feels fitting to launch new mortgages that are linked to it.

"While there was a minimal increase to the bank base rate in November last year, this doesn’t appear to have quashed the appetite for variable rate mortgages."

David Hollingworth, associate director of communications for London & Country Mortgages, said: "Discounted deals are of course linked to the lender’s SVR and are therefore variable rates which will fluctuate in line with any SVR movement. 

"We’re still seeing the vast majority of borrowers opt for fixed rates, which offer very competitive rates even when compared to variable rate options. 

"With base rate still exceptionally low but having ticked up last November many are more concerned that further rises could see payments rise on a variable rate with still a more limited possibility of base rate dropping which could work in their favour."

He said even if the base rate is cut again (from 0.5 per cent) there would be no guarantee that lenders will pass on that cut to borrowers by reducing their SVR.