Mortgage payments often form a significant part of a household’s regular expenditure, to the extent that many Britons are considered to be in ‘mortgage poverty’. For this reason, many people will want to ease the burden of their payments, and there is a specific way money can be saved. However, growing numbers are missing out on the opportunity to potentially slash their bill by thousands.
Research undertaken by Experian has revealed almost half of homeowners are on their provider’s Standard Variable Rate (SVR) – which usually occurs once an existing fixed rate or tracker mortgage comes to an end.
The insights revealed that by simply switching to a new fixed rate deal, homeowners could end up saving up to £5,000.
It appears the lockdown has influenced how many people have lapsed onto an SVR rate, and thus the numbers of people who could be paying more than they need to.
The organisation found 46 percent of those asked were on an SVR mortgage, an increase of two percent from March of this year.
While the base rate currently stands at a historic low of 0.1 percent, rates and fees are slowly rising again.
Therefore, acting quickly to secure a fixed rate deal could be beneficial for households in the long run.
Amir Goshtai, Managing Director of Experian Marketplaces, commented on the savings mortgage holders may be able to make.
He said: “Our latest analysis of the number of homeowners on a SVR mortgage may come as a surprise, especially when many households are facing financial struggles.
“But, 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.
“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.”
As Standard Variable Rates can go up or down any time, they are likely to have more of a volatile impact on a household.
It may make it more difficult to budget or plan ahead, although the arrangement may suit some.
But being proactive is likely to be the key to cutting costs.
Mr Goshtai concluded: “For a few years now, there has been inertia around switching because people think it takes a lot of time to find the best offers.
“Yet online tools make it easy for people to compare and search credit providers so they can make savings.
“The market is changing as lenders regularly review their acceptance criteria and capacity to handle applications.
“This makes it particularly important to use a broker and eligibility services to help you find the right lender, especially for higher loan-to-value ratios.”