Rate change ignorance could hit borrowers

27-Nov-2007

Finding the best first mortgage deal is more crucial than ever for first time buyers in the current financial climate, but new research from Nationwide has revealed that many are unaware of just how much they could save on a lower mortgage rate.

The lender's study asked Britons to calculate the difference in cost between a two year fixed £120,000 mortgage charged at 5.6 per cent interest, and those charged at 6.6 per cent.

Almost a quarter of respondents were unable to provide any answer, though the most popular answer was an estimate of between £500 and £2,000 (selected by 28 per cent).

Just 25 per cent of those surveyed correctly worked out that the difference could be as much as £4,000, Nationwide has said.

"As our research shows, most people don’t understand the impact that just a one per cent difference can make, meaning they could be wasting thousands of pounds," confirmed Nationwide divisional director for mortgages Matthew Carter.

"We therefore urge borrowers to make time to shop around and compare the total costs over the life of a deal before making a final decision.

"After all, a £4,000 plus saving on a five year deal for a couple of hours of work is a pretty good return," Mr Carter added.

First time buyer mortgages will be subject to more restrictive lending policies next year in light of the credit, it was recently suggested.

First-time buyers 'should look to independent advisors in times of change'.

Long-term fixes 'will not help first time buyers'

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