Tue, 25 Sep 07
Homeowners not looking for a better deal when their fixed rate mortgage ends face a hefty increase in their repayments if they stay on their lender’s standard variable rate...
Research from price comparison site moneysupermarket.com reveals two years of this 'mortgage inertia' would cost households an extra £2,600 each2 a hefty price to pay for not shopping around.
Research by moneysupermarket.com found the difference between remortgaging a new two-year deal or staying on an SVR for two years is £2,629.44.
Louise Cuming, head of mortgages at moneysupermarket.com, said: This shows how vital it is for homeowners to find the most competitive product when their fixed rate deal comes to an end.
Providers have long played on the fact homeowners can be slow to react when their deal ends. Switching homeowners to an SVR increases bank and building society profits at our expense.
Potentially ‘huge’ rewards
Ms Cuming continued: "People should bear in mind for just a little work comparing mortgages, the rewards can be huge. Anyone coming to the end of a fixed term product should be looking for their next deal now and not leaving it until they have languished on an SVR for a while. Lenders will sting you for laziness.
With one in five homeowners on an SVR, it is crucial for people to look for a better deal.
Research carried out by YouGov in March 2007 found 19 per cent of mortgage holders are on an SVR. 19% of 11.8 million = 2.242 million people. 2.242 million x £2,629.44 (see note 2) = £5.895 billion
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