Almost a third (31%) of eligible homeowners are planning to cash in on low interest rates in 2017.
One in four (25%) of those plan to act now and remortgage in January. However, the potential savings they could be making are being underestimated by nearly half, according to a new report from TSB.
The survey of 2,000 homeowners found the average saving they expected to make from remortgaging their property was estimated at £49 a month.
This compares with an actual average of £96 per month, or £2,300 across the life of a two-year fixed term on a £100,000 mortgage.
A third (33%) of JAMS – those just about managing financially each month on an income of between £12,000 to £34,000 – are planning to remortgage in 2017.
A majority (88%) are doing so to free up monthly income, lock in at a fixed rate to better manage their money, or take advantage of the low interest rate environment.
Despite these potential savings, some homeowners remain unaware of the opportunity altogether. More than half (54%) aren’t able to correctly identify the Bank of England base rate as 0.25% and 15% of homeowners who aren’t considering remortgaging say they won’t be doing so because it’s too much effort or it hasn’t crossed their mind.
Ian Ramsden, director of mortgages at TSB, said: “Mortgage payments are often the biggest outgoing for many households. By remortgaging, homeowners stand to save up to £96 per month on average, which can make a huge difference to family finances. It could mean being able to afford a family holiday, carry out much needed home renovations, or simply help ease the pressures on household finances each month.”
In August, the Bank of England cut the base rate for the first time in seven years to 0.25%, prompting mortgage lenders to slash rates.
Remortgaging hit a seven-year high in October as borrowers rushed to take advantage of the low deals currently on offer.
According the Council of Mortgage Lenders, remortgage activity for the month grew 11% to £6.1 billion, up 7% compared to the previous year and the highest amount since 2009.
Remortgaging at a lower fixed rate allows homeowners to free up extra cash for other uses.
More than a third (37%) of those surveyed by TSB said they would use the extra money to overpay their mortgage payments, with the aim of becoming mortgage free faster.
The research found that 39% would use the extra money to go on holiday, while 16% would spend the money on doing up their garden.
A third (30%) plan to carry out DIY jobs and one in five (21%) would use the cash for a major home renovation like a loft conversion or extension.
