UK households can cut £330 a month off their mortgage payments

James Rodger

5 September 2024 at 8:54 am·2-min read

UK households have been urged to switch mortgage deal to save £330 a month as the Bank of England slashes rates. Homeowners could save up to £330 per month by switching mortgages to a fixed-rate deal from a standard variable tariff.

It comes as interest rates begin to fall following the Bank of England's base rate cut. Tom Lyon, Money Expert at Compare the Market, said today: "Households will welcome falling mortgage rates after the recent Bank of England decision. However, fixed rates remain high by historical standards, and borrowers who locked in low rates years ago could face substantially higher mortgage costs if their previous deal expires soon."

Lyon advised homeowners coming off mortgage deals to shop around online for better fixed-rate options. This approach could potentially save thousands in annual repayments compared to defaulting to an SVR. He emphasised the importance of staying informed about market developments.

"It's a good idea also for homeowners to keep a close eye on how the market continues to evolve so as to be as informed and confident as possible in their financial decisions," Lyon added. According to analysis from Compare the Market, which looked at Moneyfacts figures along with Nationwide’s mortgage payment calculator, the average SVR stands at 8.16 per cent compared to the average five-year fixed rate of 5.38 per cent.

By moving to a five-year fixed rate, this could save mortgage holders £330 per month or around £3,960 per year. When compared to an average two-year fixed rate of 5.77 per cent, homeowners could save £286 per month or £3,432 annually on their mortgage repayments if they moved from an SVR.

,This is based on a mortgage debt of £178,523 per household and a 30 year mortgage term, according to Compare the Market figures released today (Thursday September 5).

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