Homeowners on a standard variable rate (SVR) mortgage could save themselves up to £504 per month in payments if they switch to a fixed rate, data has shown.
Analysis from Compare the Market found that, based on a five-year fixed mortgage of £254,507, the monthly payment would be £1,394 at the average rate of 5.18%.
This is compared to the average SVR, which was 8.17% in February, according to figures from Moneyfacts. Borrowers on an SVR on the same mortgage loan would be paying £1,898 per month.
In total, homeowners could be saving £6,048 per year in mortgage payments.
Even at a higher rate of 5.56% for a two-year fix, borrowers could still save £5,316 per year or £428 per month by switching from an SVR.
Average SVRs at a high
Compare the Market said that, over the last year, the average SVR had risen by 1.33 percentage points from 6.84% to 8.17%.
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 (BoE) begins to cut rates, we could see even more competitive deals return to the market.
“If you are a homeowner on an SVR 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.’’
