Recent research by Yorkshire Building Society shows that the number of mortgage borrowers now on their respective lenders’ SVRs (Standard Variable Rates) is over 2.3 million, representing 28% of the total mortgage market.
Typically these households have come off fixed term discounted mortgage deals which were available two or more years ago. Lenders SVRs, currently averaging [5.04%] are now well above current best buy deals and could benefit from switching to a better deal.
However in the present environment the most competitive deals are only available for loans that have low LTV ratios, typically less than 85% (meaning over 15% in equity). Those coming off special deals on to SVR, but with LTVs remaining above 85%, will be unlikely to remortgage to a more attractive rate.
The good news is that 75% of the current 2.3 million SVR mortgage payers are ‘free to move.’ These 1.7 million (21% of the total UK mortgage market) who have LTVs below 85% have over £116 billion mortgage assets and are free to move to more competitive rates that could collectively save them up to £1.8 billion a year interest payments.
There is also good news for first time buyers who will enter the market as it is starting to open up and incredibly there are deals available where as little as 10% deposit can secure a mortgage at a reasonable rate.
The bad news however is that 440,000 mortgage payers are on SVRs with LTVs above 85% (357,000 are above 90% LTV). These mortgage borrowers, with loans totalling over £68 billion, are currently unlikely to obtain the best buy new deals due to lack of equity.
There is an easy way to find out how much you could save by switching providers, simply check out Yorkshire’s 3 Minute Mortgage Check. Eight out of ten users have found that they are able to make savings by switching their mortgage provider.
Tom Girling, Mortgage Product Manager at Yorkshire Building Society says;
“A record number of mortgage customers are currently stuck in ‘mortgage limbo’ on SVR rates that are generally far higher than best buy deals. Our analysis shows that the vast majority could make significant savings by switching to a better rate mortgage and with 80% having at least 15% equity in their home, they are free to switch lender right now.”
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