Standard Variable Rates - Are they really??

I took out a home loan in August 2008. The loan was on a standard variable rate. Looking today I noticed that I am now paying 0.19% more than what the same product is advertising it's 'standard variable rate' as. I phoned my lender to question why I was paying above the advertised rate now and basically got told that the standard variable rate is not the same now as what it was when I took out my loan, I get that, that is why it's variable. However the guy I was speaking to could not get where I was coming from. Does this make sense to anyone?? I would have thought that on a given product where you have chosen the option of the variable rate then that is exactly what you get, what the bank/lender's variable rate is on that product at any given time? What am I missing?

 

Hi Jacksback,

When a home loan is variable, the bank can vary the interest rate at any time.
When it is a fixed rate loan, you have fixed with the bank to lock in a certain rate for a particular amount of time (eg, think of a term deposit).

Cheers,

Dan

 

Jacksback,

Maybe you were on a introductory variable rate before. Sometimes banks offer this type of discounted variable rate to new customers. It usually lasts for 12 months and then you go back to the standard variabe rate.

 

Thanks for the reply guys but I was never on an introductory rate, simply the advertised standard variable rate for the product chosen. I understand that the rate can be varied at any time, the bit I just don't get and don't understand if I have any ability to question is that my rate for whatever reason has now crept up to 0.19% higher than the standard variable rate being offered on this product?

 

Banks play all sorts of games with the rates. The most common one is they release a special product which attracts lots of people over a few years. Then they withdraw the product from sale, increase the rate and come up with a new special offer which they then promote to their new customers.

They know from experience that many people will either not notice or will just not care enough to switch.

In the last year we've seen a lot of them use a low Std Var Rate to attract customers for a short period, and then they put the Std Var back up in line with the other banks. Some people are choosing NAB at the moment because of their lower standard var rate, but of course it will not stay that way for long

 

I've seen this before with small lenders.
I had 1 of those but bit the bullet and refinanced with a bank