The Best Mortgages

publication date: Feb 3, 2011
author/source: Kate Faulkner, Property Expert and Author of Which? Property Books

The Best Mortgages

Homeowners Not Reviewing Current Mortgages

According to Unbiased, a phenomenal 48% of homeowners have "not reviewed their mortgage since the base rate fell to 0.5%". For those on a standard variable rate (SVR) more than half haven’t bothered to check they are on the best deal or check that their finances are in order now for when interest rate rises hit, possibly as soon as the second half of 2011.

According to Unbiased, people claimed that “because the base rate was so low they felt they didn’t have to worry about their mortgage at the moment".

However, according to Andrew Montlake at Coreco, "At the moment, whilst many people feel they are in a comfortable place, it is important to identify how this would change if rates were to rise by 1%, which is a realistic possibility in the next 12 months. For anyone currently on a variable rate at around 3% or more it could well be worth checking out your available options. Tracker products from 1.99% and fixed rates from 2.65% for 2 years or 3.95% for 5 years will not hang around forever. In general, the closer we get to an increase in Bank Base, the higher fixed rates tend to creep, so waiting until an actual rise takes place may be too late for the best products.”

If interest rate rises impact on mortgages, just a small rise from 0.5 per cent to 0.75 per cent would add £375 to the annual interest on a typical £150,000 mortgage. With increased costs in fuel, food and utility bills, this could for some be a ‘step too far’ on their finances and mean that they may need to start cost cutting now to retain their home in the future.

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