Just over one in four (27%) of mortgage borrowers understand how cuts to the Bank of England’s (BoE) Base Rate could impact their mortgage repayments, new research has revealed.
Trussle, which claims to be the UK’s first online mortgage broker, polled 4,141 adults, of which 1,185 were homeowners with a mortgage, and found that just over one in 20 mortgagees had considered switching mortgages since the BoE cut its Base Rate from 0.5% or 0.25% in August 2016.
One in five said they hadn’t switched because the process would be a hassle, while 14% complained that it would be complicated.
Borrowers could save £3,500 a year
But if homeowners were prepared to shop around and switch from the standard variable rate (SVR) to a market-leading deal, they could save up to £3,500 a year, Trussle adds. This saving is £380 more a year since the BoE’s Base Rate cut.
Ishaan Malhi, chief executive and founder of Trussle, says: “The mortgage sector is shrouded in a level of complexity and jargon that continues to discourage borrowers from acting swiftly to secure a better deal. The Base Rate is the most significant factor affecting mortgage rates, so it's a shame that so few understand its effect on the most important financial commitment of their life.”
The research also found that there was a gender gap when it came to understanding the Base Rate cut’s affect on mortgage interest rates. While 35% of men said they understood its impact, only 19% of women claimed to do so. Men were also more likely to keep an eye on their mortgage payments, with 33% of men saying they did so compared with 23% of women.