Despite an expected rise later next year, a third of people with mortgages have no idea what rate of interest they are paying, new research has revealed.
According to Which? Mortgage Advisers, one in three (32%) mortgage holders are unaware of the rate of interest on their mortgage with just three in 10 people (29%) sure of their exact rate.
Nine in 10 (89%) homeowners who knew their exact interest rate felt informed about the impact of a potential rate rise on their finances, yet this fell to only three in five (58%) for those who didn’t know their mortgage rate.
With the Bank of England widely expected to raise interest rates in the second half of next year, there has been a boom in fixed rate deals which enable consumers to take advantage of current low rates.
Research from the Mortgage Advice Bureau has found that the popularity of fixed rate mortgages is approaching record levels, with 96% of homebuyers opting for a fix in September.
The average two-year fixed rate rose from 2.68% in August to 2.72% in September, the first rise after 12 months of consecutive record lows.
Separate analysis by Which? Mortgage Advisers found a 55% increase in the number of fixed rate deals on the market over the past two years, with fixed rate deals now making up three quarters (77%) of the products on the market.
Which? Mortgage Advisers said that 34% of homeowners are currently on a standard variable rate mortgage and could save up to £123 a month if they switched to a two-year fixed rate deal.
David Blake from Which? Mortgage Advisers said: “With interest rates so low, we have seen a significant increase in the number of fixed rate mortgages available and a surge in households looking to take advantage of these deals ahead of any potential rise.
“That said, it’s important to remember that fixed rate deals typically have higher rates than trackers – for the time being at least – but fixing now could potentially save you money in the long-term. Now is the time to seek independent mortgage advice if you are concerned about the impact a rate rise might have on your finances.”
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