Editor's Pick

Switch to a fixed rate mortgage and save over £500 a month

Switch to a fixed rate mortgage and save over £500 a month
Christina Hoghton
Written By:
Christina Hoghton

Languishing on your lender's standard variable rate (SVR) instead of remortgaging to a fixed rate could cost you dearly.

That’s according to Compare the Market, which has worked out that the average UK mortgage borrower could save £504 per month by moving onto a fixed rate from an SVR.

That’s the equivalent of saving £6,048 per year switching to a five-year fix and £5,316 if you fix for just two years.

Average fixed rates

The price comparison site based its research on an average mortgage debt in the UK of £254,507. It also used average rates from Moneyfacts, finding that the average SVR is 8.17%, while average two-year and five-year fixed mortgages are 5.56% and 5.18% respectively.

Andy Hancock, chief growth officer at Compare the Market, said: “The availability of more fixed rate mortgage deals is a welcome change to many homeowners. If inflation falls and the Bank of England begins to cut rates, we could see even more competitive deals return to the market.

“If you are a homeowner on an SVR mortgage, switching to a fixed-rate deal could save you thousands of pounds in yearly mortgage repayments.

“As mortgages are usually a household’s biggest outgoing expense, it’s important to compare mortgage products online – checking the available deals now and staying aware of what is happening in the market to help you prepare and potentially save for the future.”

Related: Last sub-4% fixed deals disappear as rates rise