Northern Rock has claimed that many UK mortgage borrowers coming to the end of their fixed rate deal could be better off if they took a mortgage with Northern Rock, even if they only have 20% equity.
Almost 200,000 of these consumers are due to come to the end of their fixed rate deal in the next six months, and more than 80% of these will end their deal on an interest rate of 4.00% or above.
Fixed rate pricing across the market is at an all time low, and as Northern Rock offers a range of two-year fixed rate mortgage deals below 4.00%, they could save some borrowers more than £100 per month compared to their existing deal.
For example, the average fixed interest rate ending in January 2012 for borrowers with 30% equity in their property is 4.68%. A borrower switching from this to Northern Rock’s two-year fixed rate at 2.67% would see their monthly payment fall by £145, saving them £3,480 over the fixed rate period.
For borrowers with 20% equity in their property, the average fixed rate ending in January 2012 is 5.09%. A borrower switching from this to Northern Rock’s two-year fixed rate at 2.47% would see their monthly payment fall by £120, saving them £2,880 over the two-year deal.
Lloyd Cochrane, head of lending products at Northern Rock said: “Many people do prefer the security of a fixed rate mortgage and this research highlights the opportunity that exists for consumers in the market at present
