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New research reveals standard variable rate mortgage is still the preferred option with 37pc of homeowners, rising from 35pc from January 2011, report Unbiased.co.uk.
With the Bank of England base rate remaining at 0.5pc for a record 31 months now, tracking data from unbiased.co.uk reveals the continuation of the ‘interest rate-spoilt’ generation means homeowners may be missing out on the lowest fixed rate deals on the market in decades.
The data reveals standard variable rate (SVR) mortgages are still the preferred option with 37pc of homeowners, rising from 35pc from January 2011
With SVRs remaining lower than best buy fixed rate mortgage deals in the current market place, it appears homeowners are still refraining from remortgaging to a fixed rate deal until the base rate starts to rise.
A huge 46pc of homeowners have not reviewed their mortgage at all since March 2009 when the base rate first hit 0.5pc and 16pc believe the base rate is so low they do not need to worry about reviewing.
With fixed rates falling below 5pc for the first time in decades and the threat of future interest rate rises becoming more real, homeowners are potentially missing out on the best fixed rate deals.
When it comes to fixing however, the rate homeowners would be prepared to fix at now is an unrealistic 3.4pc
This has dropped from an average 4.0pc in January 2009. Interestingly the last 24 years has never seen 5 year fixed rates lower than 4.99pc and the current average 3 year fixed rate is 4.35pc.
Despite the current market conditions and fixed rates reaching an all time low, homeowners remain out of touch with what is available to them.
However, fixed rate mortgages do remain popular with 18-34 year olds, where 44pc currently have one, a rise of 6pc from 38pc in January 2011. This suggests the security of a fixed rate is attractive to the ‘first time buyer’ market.
Karen Barrett, Chief Executive of unbiased.co.uk comments:
“With the base rate now remaining at a record low of 0.5pc for 31 months, our tracked research shows that homeowners could be missing out on the opportunity to bag some record fixed rate deals.
“Once rates begin to rise so will the price of fixed rates, meaning that now could well be the perfect time review their mortgage finances and move to guard against the potential of increased payments in the future.
“The low base rate has also had a dramatic effect on homeowners’ rate expectations with our research showing a stark contrast between what consumers would be willing to fix their mortgage to and the average rate available.
“It can be very confusing for homeowners to keep track of which is the best mortgage for them and when is the best time for them to move onto a new deal.
“Homeowners should seek whole of market mortgage advice now to ensure they get the best deal from the whole of the market at the right time. Consumers can carry out a free and confidential search to find a whole of market mortgage adviser near them at unbiased.co.uk.”