Recent research from Legal & General indicates that over one in three of those negatively impacted financially by the pandemic are planning to revert to their lender’s SVR (Standard Variable Rate) rather than seek a new mortgage deal.
The latest research from Moneyfacts.co.uk illustrates how this may cost thousands of pounds in higher monthly repayments to those who can potentially afford it the least.
With today’s average SVR sitting at a low of 4.41% following last year’s cuts to base rate, those coming to the end of a two-year fixed rate deal taken in March 2019 when the average rate was 2.49%, could face a rate hike of nearly 2% if they revert to their SVR – and therefore could potentially save over £3,500* if they were to secure a new two-year fixed rate deal today.
Those coming off a five-year fixed rate deal from 2016 and who are looking for a similar arrangement now may be pleasantly surprised to see that the equivalent average rate is a significant 0.49% lower than when they last secured a deal which, compared to rolling onto an SVR, could reduce their outgoings on mortgage payments by over £130* per month. Over the 60 months of a typical five-year fixed deal, that could equate to a total of over £8,000 saved.
Those concerned about their initial outlay on costs associated with a new mortgage may wish to note that while the average fee charged on a fixed rate mortgage is £27 higher now than this time last year, 34% of the fixed rate deals currently on offer contain no product fee, and the proportion of the market where incentives are available remains relatively stable year-on-year.