The gap between the best fixed rate mortgages and lenders’ SVR has more than quadrupled according to the Financial Conduct Authority. Jeni Browne explains why this is not good for 2 million borrowers.
Sitting down this morning, ready to enjoy a coffee and take a few moments to bask in last night’s football glory (anyone else feel like they were about to go into cardiac arrest during those penalties!?!?!), I got a note through which really shook me.
The FCA is reporting that nearly TWO MILLION British homeowners are sitting on their lender’s Standard Variable Rate. What this means is that a borrowers’ initial deal, for example, a 2-year fixed rate, has finished, and they have then bounced onto the lender’s standard rate of lending (commonly called Standard Variable Rate) which is invariably high.
How high, I hear you ask. Well, these days the average SVR sits at around 5% which is way above the price of most 2-year and even many 5-year mortgage rates today.
I appreciate that there are a fortunate few who secured deals when lenders’ SVRs were incredibly low – think 0.5% over base rate. Well done those people, hang on to those deals for as long as you can!
If you’re not one of those lucky people, it probably means that you could be one of those two million people paying way over the odds on your home mortgage. Even at 90% LTV borrowing, rates are coming in at 2.3% (so way below 5%) and at 70% you can borrow at rates of under 1.5%.
The nuts and bolts of this are that there are a lot of people literally burning money every month. So, if you need something to keep your mind occupied in the run up to Saturday’s quarter finals, having a look at your residential mortgage arrangements to see if you can save yourself a few bob could be a very good idea.
If you’re too busy, we offer a FREE mortgage health check (no obligation). All you need to do is answer four simply questions and we can give you a good idea of how much you could save each month:
1. Your monthly mortgage payment
2. Your mortgage rate
3. The outstanding loan
4. How much you earn
You can call the Residential Desk directly on 0345 345 6788 or email your answers to: firstname.lastname@example.org
We aim to answer emails within two hours (during a working day).
We look forward to helping you.