uSwitch research has indicated that 77% of mortgage holders in the UK are set to miss out on potential savings of nearly £1.6 billion every year, as lenders fail to communicate with their customers.
The comparison site said that with 2.1 million homeowners on a fixed rate mortgage which is due to end in the next 15 months, and 32% not knowing what their payments might be once their deal ends, there is a real risk that many will be caught out by a possible interest rate rise.
According to the research, 79% of mortgage holders have not re-mortgaged in the last two years, or even considered it. Of this group, 17% say they are happy with their current arrangement and just 5% feel loyalty to their lender.
Eight out of 10 mortgage holders are not making the most of the opportunity to switch to a better mortgage deal and save money. So, while switching may be on the rise, the current drive to fix is being led by a minority of just 15% of homeowners.
33% of those who have successfully re-mortgaged to a fixed rate deal switched because they wanted to avoid paying more in the event of an interest rate rise. A further 29% said that the switch to a fixed rate has meant they have secured a lower interest rate on their mortgage. Overall, the move has already paid off, as these respondents cited an average saving of £66 a month, or £792 a year.
Tashema Jackson, spokesperson at uSwitch.com, said: “It is unacceptable that the majority of UK consumers nearing the end of their fixed rate mortgage deal are unaware of the consequences of slipping onto their lender’s Standard Variable Rate, and the additional strain it could put on their finances.
“With the Bank of England hinting at an interest rate rise in the coming months, lenders need to provide clearer information to their customers. This should include explicit detail about the ramifications of moving from a fixed rate mortgage deal to the lender’s Standard Variable Rate, and what that means for their monthly mortgage costs.
“Unlike many other financial service providers, mortgage lenders are not obliged to contact their customers before their deal ends. This needs to change urgently as homeowners have a right to know how dramatically their financial situation could be affected if they don’t move to another fixed rate deal.”