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Print PageMortgage costs to increase by half a billion pounds within the next six months
- Half of all mortgage holders have fixed rate deals rising to 67% of those aged under 35
- 1.2 million of those on fixed rates are within 6 months of the end of their deal
- Typically fixed rate mortgage holders are paying 5.5% – the cheapest deal on the market now is 6.15%1
- Annual mortgage costs for those coming off fixed rates could increase by £522 million
- One in five mortgage holders are on a standard variable rate (SVR) – wasting £705 million a year on unnecessary mortgage payments
- 2.6 million homeowners are planning to remortgage in the next 6 months – with two-thirds not optimistic about the prospect of refinancing their property
- Visit www.unbiased.co.uk/find-a-mortgage-adviser to find a local mortgage adviser to make sure you are getting the best deal
New figures from unbiased.co.uk, the free ‘Find a Mortgage Adviser’ service, shows that British homeowners are in for a £522 million hike in their annual mortgage costs within the next six months.
This is the estimated amount that mortgage costs will increase for the 1.2 million homeowners who are currently on fixed rate deals which are due to run out within 6 months. It is not surprising that – with the withdrawal of many of the great mortgage deals in recent months – two-thirds of those planning to remortgage their property in the next 6 months are not optimistic about the outcome.
Fixed rate mortgages are by far the most popular deal amongst British homeowners, according to www.unbiased.co.uk first Mortgage Waste Report. This report – which will be repeated quarterly – examines the amount of British homeowners who are paying too much for their home loan.
According to the report:
|
Type of deal |
Percentage with this deal |
Typical mortgage rate stated |
Average outstanding debt stated |
|
Fixed Rate |
50% |
5.5% |
£98,859 |
|
SVR |
21% |
6.1% |
£58,240 |
|
Tracker |
13% |
5.4% |
£100,151 |
|
Offset |
4% |
5.7% |
£83,136 |
|
Capped/disc |
3% |
5.4% |
£88,465 |
Worryingly 13% – or 1.2 million – of those on a fixed rate mortgage are within 6 months of the end of their deal. At this time the mortgage costs could increase as the homeowner will switch to their lender’s standard variable rate. According to the research – homeowners on fixed rates are paying 5.5% per month, 0.6% less than those on a standard variable rate. The average debt for those on fixed rates is £98,859. This could mean an increase of £522 million on mortgage costs assuming all end up on their lenders standard variable rate.
Another startling finding is that one in five homeowners (21%) are paying their lender’s standard variable rate. These homeowners are typically on a rate 0.5% higher than the average according to the report – with average debts of £58,240 this means they could be paying as much as £705 million too much on their mortgage each year.
The report shows that 2.6 million are planning to remortgage in the next 6 months – but there appears to be little optimism about the prospect of refinancing their property. Only 31% scored themselves higher than 6 out of 10 in terms of how positive they feel about the process. Over half (53%) scored themselves 4 or less in terms of how they feel about re-mortgaging and 14% scored themselves 0 out of 10.
Karen Barrett, Marketing Director of Unbiased.co.uk, commented: “The message from unbiased.co.uk’s first Mortgage Waste comes through loud and clear. Confidence is low in the market – with so many of best deals gone since Northern Rock – those that need to remortgages are worried about the prospect.
“A mortgage adviser can help those that need to remortgage – like the 1.2 million coming to the end of their fixed rate deals – get the most appropriate deal for them. A broker could also help sort out a new mortgage for the one in five who are languishing on their lender’s Standard Variable Rate. These rates are higher than the best deals you can get – and lenders rely on homeowner’s being lethargic to charge them more.”
For further information please contact:
|
Karen Barrett |
Anna Schirmer/Jennifer Comerford |
|
Director |
Lansons Communications |
|
Unbiased.co.uk |
020 7294 3682 |
|
020 7833 3131 |
|
To easily access the industry’s expert mortgage commentators look online at www.unbiased.co.uk/find-a-mortgage-adviser/media
Notes to Editors
1: http://www.moneyfacts.co.uk/mortgages/bestbuys/2-year-fixed-rates.aspx
Opinium Research carried out an online poll of 1,559 British Mortgage holders between 25th June and 2nd July 2008. Results have been weighted to criteria nationally representative of UK mortgage holders.
Unbiased.co.uk provides a free online ‘Find a mortgage adviser’ service that helps consumers find whole of market mortgage advice in their local area. Our aim is to help customers find the best standard of mortgage advice available whilst maintaining confidentiality.