One of the biggest banks in the UK has claimed this week that mortgage customers in the UK could save up to £1,200 a year, just by remortgaging their homes. Barclays Bank carried out a survey that found a staggering 58% of homeowners in the UK had never switched mortgages, apart from when moving house, leaving themselves with out of date mortgages which could be far more expensive than some of the new remortgages on offer.
The bank's survey found that a standard variable rate mortgage with most lenders has an interest rate of around 4.79%, 1.2% higher than the equivalent two year fixed rate deals on offer. For a £150,000 mortgage over 25 years, this equates to a £108 a month saving, down from around £859 a month to £751 a month.
Head of mortgages at the bank, Andy Gray explained, The fact that around six in ten homeowners have never changed their mortgage outside of moving house suggests that they simply don't realise the level of savings to be made by remortgaging.
According to Barclays research nearly one million homeowners are currently sitting on a standard variable rate mortgage with no early repayment fees, leaving them free to remortgage and start saving money straight away. With nearly every fixed or tracker rate mortgage switching to a standard variable rate at the end of its initial rate term, many people have ended up on a standard variable rate mortgage without really noticing.
One of the biggest reasons customers are avoiding remortgaging their home, other than not realising they can save money, is waiting to see what happens to the Bank of England base rate. Many will fix their remortgage rates when it looks set to increase but with fixed rate deals currently costing far less than standard variable rate products, why not start saving money now, knowing that if interest rates do increase, you'll be safe as you have a fixed rate remortgage already.