Two million people have their mortgage on a lenders Standard Variable Rate!

It is estimated that over two million people have their mortgage currently sitting on the lenders Standard Variable Rate.  These are the findings of the Financial Conduct Authority’s interim review of the mortgage market competition.  The regulator found that consumers are more likely to stay with their existing lender, rather than move to a new lender where the rates could be cheaper.   

Although, close to half of those currently on an SVR would not benefit from switching, as they are already on a good rate, or close to the end of their mortgage term.

Interestingly, and worryingly, the report also estimates that over 260,000 borrowers are with lenders who are not authorised to offer them new mortgage products! This is because the lenders ‘sold on’ the customers mortgages to another institution. This is obviously concerning as customers are paying over what they need to and may not be able to move to a better lender.

However, it is surprising how many people don't review their mortgage rate frequently.  Many still believe that rates can drop further and some just really can't be bothered with the hassle to change.  The reality is that we are on a knife edge and rates are predicted to increase further, but the mortgage pundits are now suggesting later in 2018 is more of a realistic expectation for the next rate rise.  As such, many are now taking advantage of the opportunity to remortgage with a free valuation and free legal costs but are chancing their arm with a short-term tracker rate (lower rates than fixed, but can fluctuate).  Whatever your risk appetite, the options available now are likely to be better and cheaper than sitting on a lenders standard variable rate.

Another reason people don't switch is because they think they are too complex to be helped.  In a rapidly expanding market with highly competitive rates, many lenders have looked at other ways to assist customers rather than just pay rates.  This can include criteria such as types of property, types of customer, income make up, guarantors, charges on more than one property and so on.  The likelihood is that you are not alone in your requirements and there will be a lender out there willing to assist and who probably needs you just as much as you need them…