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Borrowers could save money by switching mortgage product now

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Most lenders haven’t put mortgage rates up by the same rate as the Bank of England base rate rise, but some borrowers could still benefit from a switch.

Since the Bank of England raised the base Rate last month, many expected to see a significant impact on mortgage rates. In the months preceding the hike, lenders had started to increase rates in anticipation, but it seems mortgage rates have not followed the 0.25% base rate rise as expected, with an increase of only 0.18%.

The Moneyfacts Mortgage Treasury Trends Report (not yet published) shows that the average standard variable rate (SVR) has only increased by 0.14% since 1 November.

Charlotte Nelson, Moneyfacts’ finance expert said that “just 56% of providers have passed on a rise to their SVR, with seven of them choosing to increase their rates by less than the 0.25%, which has caused the average SVR to rise more modestly”.

Switch to a better deal

Whilst the SVR rise has been modest, it is still 0.12% higher than in December last year, encouraging some Borrowers to think about switching to a better mortgage deal.

Despite many variable rate mortgage products seeing the full base rate increase, there could be significant savings to be made by switching to a fixed rate mortgage.

According to Moneyfacts, borrowers could save as much as £192.66 a month by switching from the average SVR to a two-year 2.35% fixed rate (based on borrowing £150,000 on a 25-year repayment mortgage). Given that financial experts are anticipating future base rate rises, prudent borrowers may well make the move from their SVRs in favour of the fixed-term safety net.

The post Borrowers could save money by switching mortgage product now appeared first on BuyAssociation.



This post first appeared on BuyAssociation, please read the originial post: here

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