Homeowners paying SVR are missing out on £1.8bn in savings
Published ¤ 16/07/2010 16:23:12
Over 2.3m mortgage borrowers are now sitting on SVRs, accounting for 28% of the total mortgage market, according to Yorkshire Building Society (YBS). Research by YBS revealed 75% of SVR mortgage customers are on LTVs below 85% and the lender claimed that they could were missing out on savings of up to £1.8bn by not taking advantage of the current best buy deals.
However, 440,000 customers, 19% of SVR payers, are trapped on high LTVs above 85% and are unlikely to be able to remortgage to a better rate than their SVR due to lack of equity.
The number of people on high LTV SVR mortgages has risen significantly from a year ago, YBS said, despite the increase in house prices. It said this increase was due entirely to households coming off special discounted deals which were previously available for high LTVs before the credit crisis hit.
YBS said that the only way these mortgage borrowers will be able to get a better deal will be if house prices rise further or lenders relax their criteria to offer more competitive 90% or 95% LTV deals.
The building society said that for every 1% rise in UK house prices, around 16,000 SVR mortgage payers will be able to qualify for better deals due to the lowering of their current LTV.
However, forecasts show that house prices are unlikely to rise over the next 12 months.
Tom Girling, mortgage product manager at YBS, said: "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."
This article has been reproduced from MortgageSolutions.
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