Will SVR holders miss remortgage window?
With the base rate remaining at 0.5% for a whole year, tracking data from Unbiased.co.uk shows almost a third of homeowners are on a standard variable rate mortgage. When describing their current mortgage situation, almost a third (29%) of homeowners state they are on their lender’s SVR mortgage and have no plans to change this. This has increased from just a quarter (25%) who stated this in May 2009. Homeowners are increasingly making the most of low SVR mortgages, instead of choosing to remortgage onto a fixed rate or tracker deal.
With best buy SVR mortgages still remaining lower than best buy fixed rate mortgage deals in the current market place, it appears homeowners are still refraining from remortgaging to a fixed rate deal until the base rate starts to rise. Fixed rate deals need to be very low in order to attract homeowners, as the average amount homeowners are prepared to fix on for three years has decreased over the past year from 4% in January 2009 to just 3.3%. With the best buys for three year fixed rate deals currently around 4.14% there is a stark contrast between homeowner’s ideals and reality.
Unbiased.co.uk’s research also shows there are only 10% of homeowners moving to another mortgage deal once their discounted, fixed or tracker rate deal comes to an end, compared to a slightly higher 12% in January 2009.
Commenting, Karen Barrett, chief executive, said, “With the base rate now remaining at a record low of 0.5% for a full year, an increasing number of homeowners believe that staying on their lender’s SVR is the best option for them. However, with the number of mortgage deals slowly increasing homeowners need to make sure they aren’t missing out on getting the best deals before the base rate starts to rise again, especially when in recent weeks some providers have been changing the SVR on their mortgages meaning not all of them are now as competitive as they once were. There is also a stark difference between homeowners’ ideal fixed rate deal and what they could actually get in the current environment.
“It can be very confusing for homeowners to keep track of which is the best mortgage for them and when is the best time for them to move onto a new deal. In the past, staying on your lender’s SVR was financially crippling, and while this has certainly changed, homeowners need to stay alert and active to ensure they don’t miss the best deals and see their monthly payments rocket.”