Standard variable rates (SVRs) are the deals onto which you default when your mortgage ends and you do not switch to a new product.
At this stage many homeowners will either remortgage to the most competitive product they can find with a new lender or they can move to another mortgage with the same lender – a process known as a ‘product transfer’.
But those who do nothing will automatically revert to the SVR. The rates on these vary from lender to lender, but the average SVR has increased in the last year from 6.84% to 8.17%, according to Compare the Market.
It said, with the average mortgage debt in the UK standing at just over £254,000, homeowners could benefit from switching to a fixed rate mortgage.
Switching from the current average SVR rate of 8.17% to the average five-year fixed mortgage rate of 5.18% could result in up to £6,048 in savings per year – that’s £504 per month.
Meanwhile, switching from the current SVR rate to the average two-year fixed rate, which is 5.56% at the moment, could save homeowners up to £5,316 in their annual mortgage repayments, said Compare the Market.
The comparison site has urged homeowners either coming to the end of their initial fixed rate or already on an SVR mortgage to take a look at their options and right deal for their circumstances.
Andy Hancock, chief growth officer at Compare the Market, said: “The availability of more fixed rate mortgage deals is a welcome change to many homeowners. If inflation falls and the Bank of England begins to cut rates, we could see even more competitive deals return to the market.
“If you are a homeowner on a standard variable rate mortgage, switching to a fixed-rate deal could save you thousands of pounds in yearly mortgage repayments.
“As mortgages are usually a household’s biggest outgoing expense, it’s important to compare mortgage products online – checking the available deals now and staying aware of what is happening in the market to help you prepare and potentially save for the future.’’
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