The majority of mortgage shoppers are looking at fixed-term deals following the summer rise in interest rates, an analysis from Experian has found.
In September three-quarters (74%) of searches were for fixed-term deals, rising to 83% in October, and 84% in November.
Amir Goshtai, managing director of Experian Marketplace & Affinity, said: “Mortgage shoppers have switched their attention to fixed-term mortgage deals to protect themselves from any future rate rises.
“But it’s important for potential homeowners to consider all their options – after all, buying a house is likely to be the largest purchase anyone will make.”
“If people are either on a standard variable rate, or approaching the end of their introductory deal, then now is the time find the next mortgage as the potential savings are significant.”
At the beginning of August, the Bank of England increased the Base Rate from 0.5% to 0.75% – it’s highest level since March 2009.
The increase in the cost of borrowing appears to have discouraged potential homeowners from considering tracker mortgages as an attractive option for their loan. Instead, borrowers appear to want to future-proof their largest financial commitment.
In comparison, just 4% looked at tracker mortgages in September – the month after the rate rise – followed by 6% in both October and November.
Meanwhile, further analysis from Experian has found mortgage holders could find themselves overpaying by £1,800 a year if they fail to switch deals when their introductory rate finishes and they slip onto their lender’s standard variable rate (SVR).
Based on the average mortgage amount taken out by Experian customers in October 2018 of £151,955 with a typical SVR of 4.39% over a 25-year term, the monthly payment equals £822.41.
But with an average introductory rate of 2.38% offered to Experian customers in October, those signing up to this product would have repaid £672.55 a month on the same mortgage amount – a difference of £149.86 monthly and £1,798.32 annually.