Ahead of this week’s Bank of England’s Monetary Policy Committee meeting to determine the country’s interest rate, a study by Uswitch.com has found that low-income homeowners are less likely to remortgage their homes.
The study surveyed over 2,000 British homeowners in different income brackets to assess how effectively they are switching mortgage deals to mitigate the impact of rising interest rates.
The survey revealed that 62% of low-income homeowners (£25,000 or less) have never switched lenders for a better deal, compared to 46% of high earners (above £45,000).
Three-quarters of low earners believe they are unable to remortgage, with 68% stating that this is due to their current plan not having ended.
Kellie Steed, mortgage expert at Uswitch.com, emphasised the importance of timing for homeowners looking to make the most of their remortgage options: “Timing is absolutely essential for homeowners looking to make the most of their remortgage options.
“In the last six months of a deal, it’s possible to lock in a new remortgage deal ready for the end of your existing deal.
“Waiting until the deal has ended may mean missing out on rates that are not available in six months’ time. If, however, rates are more attractive in five or six months’ time, you can always change it – so long as the new one has not yet started.”
Steed also highlighted that despite rising interest rates, remortgaging could be a more stable alternative for most homeowners: “Switching to a new deal during periods of high inflation may feel like a mistake, as a new fixed rate deal will likely come with higher rates than previous plans.
“However, with standard variable rates as high as they are at the moment, it’s unlikely that you’ll be in a better position if you let your current deal expire and revert onto that.”
