Homeowners who roll onto an SVR could see their payments rise by £2,100 a year in interest, comparethemarket has found.
Some 10% of households on fixed mortgage terms will see their fixed deals come to the end in the next six months, equating to around 850,000 homes.
Mark Gordon, director of money & mortgages at comparethemarket.com, said: “Rolling onto a standard variable rate mortgage can cost you thousands of pounds. We may be in a ‘lower for longer’ rate environment now, but that doesn’t mean interest rates will remain at rock bottom forever.
“For those people on a standard variable rate mortgage, the additional costs should be a wake-up call. Not only could your mortgage get more expensive if the base rate rises, but SVR mortgages tend to be much more expensive than fixed rate deals available.”
The average mortgage debt in the UK is just over £130,000 and a typical mortgage term is around 20 years.
The average SVR is currently 4.89%, a jump of 2.59% from 2017.
Homeowners coming to the end of a 2-year fixed mortgage and rolling onto an SVR would therefore pay £175 more each month, jumping from an average of £680 to £855.
Today’s average 2-year fixed term rate is 2.47% meaning the same homeowner’s bills would only rise by £11 a month to £691 if they were to remortgage onto the average fixed rate.
Of those homeowners who have stuck with an SVR mortgage, over a quarter (28%) said that they didn’t think it would save them much money.
Over a fifth (21%) have not switched because they are not worried about rising interest rates.
This is in spite of the fact that over a third (35%) said they would have to cut other costs to afford the payments, should interest rates rise in the future.
The research also found over one in 10 (11%) have not switched off an SVR because they are worried about not meeting the borrowing criteria of lenders.