Habito’s head of mortgage advice Will Rhind said a homeowner on a typical SVR of 3.5 per cent could reduce payments from £1,002 per month to £834 if they select a 1.86 per cent rate from HSBC.
This is equivalent to a £168 saving per month or £2,016 per year, and the certainty that payments will not change until 2027.
Rhind added that potential savings could be even greater as SVRs could reach as high as six per cent.
He said electing for a 10-year fixed rate product, for instance Yorkshire Building Society’s 3.39 per cent deal, could save borrowers an average of £156 over a year and the security of knowing that payments will not change until 2032.
However, a survey from Habito, which collated responses from around 2,000 people, found that 11 per cent of UK homeowners said they would not know where to begin when it came to remortgaging.
Around 47 per cent said they would reconsider remortgaging to a cheaper interest deal over the next six months to save money.
Nearly 20 per cent said they would consider fixing for 10-year fixed rate or longer to avoid remortgaging in the near future.
The online broker urged the nearly two million UK homeowners on variable rates or SVRs to remortgage to mitigate some costs of inflation.
Martijn van der Heijden, chief financial officer at Habito, said: “By Spring, the forecasters are warning us that household finances will be heavily squeezed by rising energy prices and food prices.
“On top of this, we’ve had the Bank of England say that December’s base rate hike could be one of many going into 2022. Remortgaging doesn’t have to be complicated, but it can take several weeks – so speak to a broker well before your current deal expires.”
He added that many homeowners had not experienced a rising base rate environment, with homeowners who had bought a home in the last 12 years only having to remortgage when rates have been below one per cent.
Van der Heijden said there was growing expectation of a second base rate rise as soon as February, and said the firm had seen a more customers opting for five-year fixed rates or longer rather than two-year fixes.
Popularity for five-year fixed rate deals mortgages had reached an all-time high among the broker’s client bank, with 52 per cent of customers looking for such deals, whilst demand for two-year fixed rate deals has fallen to an all-time low of 37 per cent.
Remortgage customers has also reached a 20-month high of 63 per cent, compared to 38 per cent of customers seeking mortgages for purchase.
Van der Heijden said whilst the rising base rate was a risk, there had been more innovation in the market for long-term fixed rates which would protect consumers. He pointed to the Habito One product which fixes for between 10 to 40 years and was launched in March.
