The price of mortgage ignorance? £27,000
I’m appalled. Apparently, half of all mortgage seekers have no idea what’s been happening recently with interest rates.
According to mortgages site MortgageSorter.co.uk, a horrifying 48 per cent of its users didn’t realise rates went up last month.
The Bank of England has made four base rate increases since last August – adding around £90 a month to the cost of a £150,000 variable rate repayment loan – and it’s due to announce its latest decision on Thursday.
How can so many people who are about to commit to the biggest debt of their lives have absolutely no idea about what’s been happening to interest costs?
When the site asked “How has the recent rate rise affected you?”, exactly 50 per cent said they were “very” or “a little” concerned about the impact on their mortgage payments.
But 48 per cent said they “didn’t realise there was a rate rise” , while the remaining 2 per cent said they “didn’t know” how it would affect them.
Yet, as MortgageSorter founder Edward Parry points out: “Over the course of a 25-year £150,000 repayment mortgage, even a single 0.25 percentage point rise could cost them £6,750.
“And the four rises we’ve had recently could add £27,000 to their interest bill – that’s something no one can afford to ignore.”
He goes on to say: “But if borrowers aren’t clear on how much a mortgage could cost them, how can they be sure they’re making the right loan choices?”
Quite.
