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UK SVR Difference Closing in on Mortgage Averages

Housing-Market / Mortgages Jun 12, 2017 - 05:46 PM GMT

By: MoneyFacts

Housing-Market

Moneyfacts UK Mortgage Trends Treasury Report data, available today, shows not only that borrowers who are coming off a two-year fixed rate deal this month are more likely to remortgage from their SVR than at any time since October 2008, but also that by doing so they will be saving approximately the cost of a two-year variable rate


Charlotte Nelson, Finance Expert at Moneyfacts, said:

“The motivation to remortgage has been edging up in recent months, with the average SVR standing at 4.59% today, which means that those coming off a cheap two-year fixed rate could potentially see a difference of 1.72% on average. This is a marked increase particularly when compared to the average two-year variable rate tracker, which stands at 1.88%.

“With the average two-year fixed rate standing at 2.30%, borrowers will find they could be £184* a month or £2,208 a year better off if they switch from the average SVR to the average two-year fixed rate mortgage. This huge savings potential is what is driving many to remortgage away from their SVR and on to a new deal.

“Mortgage approvals released this month have fallen, from 128,937 in March to 98,746** in April, as the mortgage market starts to slow down. However, there is still plenty of motivation among borrowers on SVRs, as remortgages account for a lot of these approvals.

“Switching to a better deal is a great idea in principle, but some borrowers may be unable to move, and are finding themselves prisoners to high SVRs instead. As house prices start to fall, the main concern for many of these borrowers is negative equity.

“Competition in the mortgage market has caused a lot of borrowers sitting on their SVR to rethink their options. However, with the average two-year fixed rate remaining the same this month, there are signs that the mortgage market may be starting to stagnate, as competition in this key area wanes slightly.

“As rate reductions start to slow, now might be the time to act for many borrowers looking to switch to a cheaper deal, since any more major cuts are starting to become unlikely and so the only way from here is up.”

* Based on a £150,000 mortgage over 25 years on a repayment-only basis.

** Source: Bank of England

The Moneyfacts UK Mortgage Trends Treasury Report provides an in-depth monthly review of today’s changing mortgage trends, including all the relevant facts on the UK’s residential and buy-to-let markets.

www.moneyfacts.co.uk - The Money Search Engine

Moneyfacts.co.uk is the UK's leading independent provider of personal finance information. For the last 20 years, Moneyfacts' information has been the key driver behind many personal finance decisions, from the Treasury to the high street.


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