High street banks are making an extra £1.2bn from SVR mortgage customers

03 August 2023


Team Atom
Team Atom
Text graphic displaying the words Get Paid, Not Played

Do you have a mortgage? Are you currently paying your bank’s standard variable rate (SVR) of interest? If so, you may be able to switch to a better deal and save up to around £1,200 annually.

According to our analysis, high street banks make an additional £1.2 billion from mortgage customers who stay on their SVR every year. While many of these customers may value the flexibility that SVR offers, banks are squeezing extra profits from these customers who could actually be saving thousands if they moved to a better deal.

Having campaigned on terrible easy access savings rates and the raw deal current account savers are getting, we have now looked at the UK mortgage market as part of our ‘Get Paid, Not Played’ campaign. It calls for high street banks to deliver better value and encourages customers to take action when banks may be taking advantage of their loyalty.

What is a standard variable rate (SVR)?

Before we dive into our findings, here’s a quick explainer of what SVR is and why it’s currently ringing a profit for high street banks — just in case it’s new to you.

A standard variable rate is the interest rate set by your bank that is charged once the initial deal period on your mortgage ends. When you’ve moved over to SVR, the rate can change, which means your monthly payments can go up or down.

While the name suggests it is “standard”, lenders set their own SVR. It can be influenced by movement in the Bank of England’s base rate, but is usually not tied to it. However, in the current high interest economy, most lenders have increased SVR and, as a result, high street banks are charging their customers as much as 9.24%.1

Our findings in more detail

Our latest analysis looked at the additional income that the high street banks Lloyds, HSBC, NatWest and Santander made from their SVR customers when compared to a scenario where they switched them to their current fixed rate products.2

We found that an extra £1.2 billion in profit is being generated by high street banks every year at the expense of customers who remain on SVR. In total, the banks we looked at had a combined total of approximately £47 billion of SVR balances on their books, and the interest they receive from these customers makes up a sizeable 9% of their profit after tax.

Of the four high street banks we looked at, Lloyds had the largest estimated SVR balance of £30 billion. Not only that, it also charged the highest SVR rate (8.49%). This means that it’s picking up an additional £900 million per year from its SVR customers, making up 7% of its revenue and nearly a fifth (18%) of its profit after tax.

Switching can save thousands

Our analysis also found that borrowers on an SVR could save a lot of money if they switched from a high street bank’s SVR to a ‘best buy’ two or five-year fixed rate product.

We found that the average high street bank SVR customer3 is paying £713 per month for their mortgage, which adds up to £8,552 annually. This is based on an average SVR rate of 7.91% from the six top tier banks.4

In comparison, if a high street bank SVR customer switched to the current “best buy” two-year fixed rate product (6.00%)5, they would save £958 per year on average. This would work out as shaving 1.91% off their mortgage rate.

If the same customer fixed their deal for longer by switching to a five-year “best buy” fixed-rate product (5.36%)6, they’d be in line to save £1,265 annually. This represents a whopping 2.55% off their mortgage rate if they switched from a high street bank SVR.

Should high street banks be doing more for SVR customers?

Our analysis is being released against a backdrop of the Treasury Select Committee’s ongoing challenge to the UK’s biggest banks to pass on interest rate rises to their savers. Based on our findings, we have to ask the question about whether they’re also doing enough to deliver value to their SVR mortgage customers.

Mark Mullen, our CEO, certainly thinks more can be done. He said: “This is simply the mirror image of what has been happening to savers. We’ve been campaigning for better savings rates for months now, but we decided to focus some attention on SVR. It turns out banks are taking full advantage of mortgage customers too, and it’s not just the traditional banks, it’s even some of the new ones.

“Competition should be better, it isn’t. The incumbents should be better, they aren’t. Rate rises have exposed the inefficiencies of these organisations. They have blamed running costs and GDPR as reasons for not passing on better rates to customers, but have been called out on these excuses by the FCA and the Bank of England. We have a long-term vision to do things differently and our low-cost model allows us to do that.

“We’ve said it before, and we will say it again: loyalty to your bank is bad for your financial health. We implore you to vote with your feet and shop around for better savings and for better mortgages — it could make a real difference.”


1. Virgin Money residential SVR (correct as of 27.07) 2. Analysis of the earnings releases of Lloyds, HSBC, NatWest and Santander in 2022. SVR balances are not required to be disclosed, so data available for these four banks only and based on estimates. 3. Average customer defined as: Average loan amount for SVR £75K, 60% LTV assumed given balance and general vintage of SVR loans, 15 year term remaining (educated assumption). 4. Average SVR from high street lenders (correct as of 21 July 2023) 5. Best headline rate for a two-year fix with zero product fee, 60% LTV as of 21 July 2023 (Twenty7tec) 6. Best headline rate for a five-year fix with zero product fee 60% LTV as of 21 July 2023 (Twenty7tec)