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Save £73 a month by remortgaging, says Halifax

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Borrowers who are currently sat on a standard variable rate could save as much as £73 a month by remortgaging to a fixed rate product, Halifax has warned borrowers.

Research from the bank said borrowers could make big savings and protect themselves against future rate rises.

Despite lenders becoming increasingly competitive and rates hitting record lows, the lender said remortgage activity among customers on the standard variable rate had remained sluggish.

Fixed rates have fallen in 18 of the 28 months to December 2014 and this has seen the average rate tumble from 4.25% in August 2012 down to 3.15%.

With the average standard variable rate currently at 4.4%, borrowers could be overpaying for their mortgage.

It said a borrower who took out a typical two-year fix in December 2012 would have made monthly payments of £519 while someone on an SVR mortgage would have paid £547 – a difference of £750 over the two-year term.

By December 2014 the average fixed rate payment had dropped to £487 meaning borrowers could save £73 a month compared to those on the average variable rate.

Craig McKinlay, mortgages director at Halifax, said: “Remortgaging activity remains subdued particularly compared to the strong market activity in 2008. For more than two years the gap between SVRs and fixed rate mortgages has grown, with the latter falling to record lows.

“Current growth projections in the February inflation report support the expectation for a first interest rate rise towards the end of 2015, though uncertainty around the timing remains high. It is therefore surprising to note that more people are not taking advantage of the low rates on offer and fixing their mortgage.”

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