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Half of homeowners don’t know mortgage interest rate

Samantha Partington
Written By:
Samantha Partington
Posted:
Updated:
24/09/2014

Many mortgage holders are unaware of the current interest rate on their loan and how a rise in the Bank of England Base Rate would affect their monthly payment, a survey from the Principality revealed.

Just under half of those surveyed (48 per cent) could not say with certainty what they paid for their mortgage while a quarter of respondents did not know rising interest rates would be bad for them. A small proportion (5 per cent) thought a Base Rate rise would be good news for mortgage borrowers. 

Julie-Ann Haines, customer director at the Principality, said: “We are expecting a rise in the Bank of England Base Rate in the next few months but this is likely to be a very small rise occurring most probably in the first quarter of 2015.

“In real terms, a 0.25 per cent rise on the estimated average mortgage of £113,549 equates to around an extra £23.66 a month or less than £6 per week which should be manageable for the majority.”

The survey highlighted that basic knowledge of mortgage products among customers was strong. Of those surveyed, 95 per cent were able to name the provider which held their product, 74 per cent knew how much was owed on their mortgage and 76 per cent were aware of the date at which the mortgage would be repaid.

But only one in three (36 per cent) were able to state the current loan-to-value of their mortgage.

The factor most likely to attract a customer to a mortgage was the strength of the interest rate (61 per cent). Advice from a financial adviser (8 per cent), the financial safety of the lender (7 per cent), and having an existing relationship with the provider (4 per cent) were other factors likely to influence a customer’s decision.

One in five of those questioned stated that they do not change their mortgage.