Consumers overpaying £3.5 billion on mortgage
19 June 2003
Consumers could save as much as £3.47 billion a year in interest payments on their mortgages simply by shifting to a more competitive deal, according to new research.
The report by Intelligent Finance reveals that outstanding mortgage debt went up from £611.6 billion to £697 billion, an increase of 13.9 per cent, in the year from April 2002 to April 2003.
The bank points out that the amount consumers overpay in mortgage interest from taking out or remaining with relatively uncompetitive deals continues to rise with the rate of outstanding debt.
The survey showed that over half of UK mortgages (56 per cent) are still variable rate mortgages. With the average standard variable rate currently at 5.64 per cent, consumers could save a massive £3 billion a year by simply moving their mortgage to a more competitive deal.
Grenville Turner, Chief Executive, Intelligent Finance commented, 'The pace in growth of consumers' mortgage debt means that consumers are continuing to lose huge sums by failing to switch to more competitive deals.
'Choosing a mortgage is the single, most important, financial decision most of us make and people need to continually revisit their mortgage to ensure it remains competitive.'
Figures from the Council of Mortgage Lenders show that re-mortgage volumes are traditionally much stronger in the second half of the year, peaking in October and November.
With the average transaction taking around three months to complete, many people will be turning their minds to their mortgages in the next few weeks.
Remortgaging still only accounts for 12 per cent of mortgage debt. However, re-mortgage volumes have risen by 145 per cent in the last two years alone.
Mr Turner added, 'Innovative deals like offset banking can make consumers' money work harder for them over the short and longer-term, reducing the term of their mortgage and could potentially save them thousands of pounds in interest payments.'