Homeowners are losing around £4,000 a year by not remortgaging to a lower rate, according to a recent report from HSBC.
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1.9 million people on standard variable rates
A standard variable rate (SVR) is a bank’s benchmark interest rate set at their discretion, the average SVR is currently 4.82%. Mortgages tend to revert to a bank’s SVR after a few years on a discounted rate.
HSBC’s data reveals that 1.9 million borrowers are on their lender’s SVR. HSBC say if these borrowers remortgaged to a currently available two year fixed rate mortgage they could save as much as £329 a month – or £3,948 annually.
HSBC claim: “As a whole, homeowners could be paying almost £30 billion more than they need.”
Mortgage rates at all time lows
At the end of 2014 mortgage rates fell to historic lows, with deals below 1% on the market, and have kept falling ever since.
Notably, HSBC were the first to offer an initial rate of 0.99% (this has since fallen to 0.98%) for their two year discount off their SVR.