AccordJun 25 2018

Accord launches ERC-free discounted SVR mortgages

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Accord Mortgages has launched a new range of competitive discounted standard variable rate (SVR) mortgages, saying the range responds to brokers' concerns that customers avoid mortgages linked to SVRs.

The lender stated customers avoid these mortgages because SVRs can be adjusted at any time, even though the mortgages themselves can be a more cost-effective option in some cases.

The discounted range has removed early repayment charges, and most are available to both remortgage and purchase customers, with rates starting at 1.09 per cent for a two-year discounted SVR for borrowers requiring 6 per cent loan-to-value (LTV).

This mortgage comes with a £1,495 fee.

For those with a 35 per cent deposit, a two-year discounted SVR mortgage is available at 1.29 per cent, which comes with free standard valuation and a lower fee of £495.

Ben Merritt, mortgage manager at Accord, said: "Over the past few months we have seen a lot of demand for discounted SVR mortgages, perhaps because the low rates mean customers could potentially withstand a number of rate increases before it would have been better to have opted for a fixed rate.

"We are confident the introduction of these new and enhanced mortgages will be welcomed by both brokers and customers – for the right case, discounted SVRs could be a great alternative."

Borrowers can redeem their mortgage or transfer it to a fixed rate should they wish, at any time during the discounted period without penalty. 

All of Accord's discounted SVR mortgages also allow unlimited overpayments.

Jane King, independent mortgage adviser at Ash Ridge Private Finance in London, said she didn't like mortgages linked to a lender's own SVR because they are volatile compared with ones linked to the Bank base rate.

She said she would only use mortgages linked to a lender's SVR as a last resort.

She said that despite the changes made by Accord, she still didn't find these deals an attractive proposition for her clients.

rosie.murray-west@ft.com