This doesn’t apply to mortgage providers. Fixed term mortgage deals can be a good thing because they can provide borrowers with certainty and lower repayments – for as long as they last. If your fixed rate two year mortgage deal is coming to an end Citizens Advice has found that you could end up paying (on average) more than £400 a year extra if you go on to your lender’s standard variable rate. Most commonly fixed rate periods are two or three years although they can be longer.
Using data provided in a Bank of England/NMG survey of over 1,800 mortgage holders and interest rates published by the six largest mortgage providers, Citizens Advice estimates that:
Citizens Advice is currently exploring how customer loyalty is treated across a range of essential markets, including energy, telecoms and financial services. We often think of loyalty as something that should be rewarded though in reality we find quite a different response from service providers. In a new report, ‘Exploring the loyalty penalty in the mortgage market’, Citizens Advice highlights problems with borrowers not being informed by lenders about their options when fixed term deals come to an end. This is ‘the loyalty penalty’. As many as two thirds of borrowers said they had never been informed they could save money by switching.
People often find the mortgage market to be complex and frequently don’t have the time to shop around to get the best deal. A quarter of people who remortgaged said they found it difficult and 39% of customers say they do not have enough time to do more shopping around. Citizens Advice wants the Financial Conduct Authority to make all lenders provide clear information to new and existing customers about how much they could lose by moving to a standard variable rate.
If you want advice on which mortgage to apply for speak to a financial adviser.If you are having trouble keeping up with the repayments on your existing mortgage or have problems relating to Debt in general, Benefits, Work, Consumer Issues, Relationships, Housing, Law and Rights, Education, Discrimination, Tax and Healthcare you can: