SVR — Standard Variable Rate

What is the Standard Variable Rate?

The Standard Variable Rate (SVR) is each mortgage lender's own default interest rate. When your initial mortgage deal -- whether fixed, tracker, or discounted -- comes to an end, you are automatically moved onto your lender's SVR unless you remortgage or arrange a product transfer.

Why it matters

SVRs are almost always significantly higher than the rates available on new mortgage products. While a competitive two-year fix might be around 4% to 5%, SVRs from major UK lenders typically sit between 6% and 8%. This difference can add hundreds of pounds to your monthly payment.

For example, on a £200,000 repayment mortgage over 25 years, moving from a 4.5% fixed rate to a 7.5% SVR would increase your monthly payment by roughly £400. Over a year, that is nearly £5,000 in additional interest.

How the SVR is set

Unlike the Bank of England base rate, which is set by the Monetary Policy Committee, SVRs are entirely at the lender's discretion. Lenders can change their SVR at any time and by any amount they choose. In practice, SVRs tend to move broadly in line with the base rate, but there is no obligation for lenders to pass on rate cuts in full or at all.

When being on the SVR might make sense

There are a few situations where staying on the SVR could be reasonable. If you plan to move house soon, the SVR has no early repayment charges, giving you full flexibility. Similarly, if you want to make large overpayments without restrictions, the SVR allows unlimited overpayments.

Important caveats

Never drift onto the SVR simply through inaction. Set a reminder three to six months before your current deal ends so you have time to arrange a new product. Most lenders allow you to lock in a new rate up to six months in advance, protecting you from any rate rises while keeping the option to switch if rates fall.