Homeowners missing out on savings up to £5k due to mortgage rate

Almost half of homeowners are on their provider’s Standard Variable Rate (SVR) and could make savings of up to £5,000 by switching to a new fixed rate deal, according to new data from Experian. 

The credit reference agency revealed the number of mortgage holders on an SVR mortgage has increased to 46% during the UK lockdown period.

The figure has risen by 2% since March, when Experian reported 44% of homeowners had switched on to their provider’s SVR.

As many households around the UK struggle with the financial aftershocks of the COVID-19 pandemic, however, Experian described this rise in homeowners on their providers SVR as “worrying”.

For example, a homeowner with a £150,000 20-year mortgage loan on a typical lender’s SVR of 4.44% will have a monthly repayment of £944. The same mortgage on a typical two-year fixed rate remortgage deal of 1.14% will have a monthly repayment of £699, representing a saving of £5,880, or £245 per month.

Taking the arrangement fee of £999 into account, Experian highlighted that this would still leave a homeowner better off by £4,881 over the period of the offer. 

“With people focused on the health of loved ones and managing life in this new environment, it’s not surprising that household finances may have slipped to the back of many people’s minds,” commented Experian Marketplace managing director, Amir Goshtai.

“We want to help people take the stress out of managing their finances and support them over the months ahead, particularly given the economic uncertainty. That’s why we’ve been proactively contacting customers we think may be coming to the end of their existing mortgage and encouraging them to compare current market offers before they get switched on to their provider’s SVR, potentially saving them thousands of pounds.

“We’re starting to see interest rates and fees for fixed mortgages slowly increasing as the credit market reopens. Therefore, homeowners should review their mortgage now and take advantage of competitive interest rates while they still can to lock in a lower fixed monthly payment, giving them peace of mind and certainty for the months ahead.”

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