Although the number of borrowers not switching their mortgage deal when they could save money by doing so has more than halved over the last six years, there are still hundreds of thousands who could cut costs by remortgaging.
The FCA estimates show that 370,000 mortgage holders could save an average of £1,240 a year for two years by switching to a two-year fixed rate with their existing lender. Potential savings could be even higher if they move to an alternative lender.
A spokesman for the FCA said: “Given the rising cost of living, it’s important that borrowers consider their options and switch if they can where it meets their needs and circumstances and saves them money.”
The biggest savings can usually be found by borrowers who are currently paying their lender’s standard variable rate (SVR). However, the regulator found that around 190,000 borrowers on standard variable rates who can switch would not save money by moving to a different deal.
The FCA said that homeowners should engage with their lender or a mortgage broker if they need help to switch or with crunching the numbers to help them decide whether switching to a new deal is right for them.
Cost of living impactEven mortgage borrowers who regularly remortgage to cut costs are likely to feel the financial pressure of rising living costs, the FCA said.
There are currently 6.3m mortgages on fixed rates, but around half of these are due to finish in the next two years, leaving borrowers facing steeper mortgage costs when they come to remortgage.
The FCA spokesman said: “Many mortgage borrowers have paid comparatively low interest rates in recent years, on both fixed and variable rates, and so most will likely face increasing mortgage costs as base rates and the cost of new fixed or other incentivised deals increase.
“It is therefore more important than ever that mortgage borrowers are aware of their options and take action to switch where they can where it suits their needs and circumstances, and where it can save them money.”
Remember that you don’t have to wait until your current deal ends before you secure your next mortgage deal. Many lenders’ mortgage offers are valid for up to six months, so you can apply for your mortgage now and then arrange for it to complete when the deal you’re currently on finishes.