According to Standard Life Bank’s own research, ‘Why Mortgage Customers Miss Out on the Long Term Value of Mortgages’ by Professor Richard Taffler from the University of Edinburgh, short-term discounted mortgage rates benefit just five per cent of homeowners.
The report revealed that the majority of consumers taking out short-term discounted mortgages don’t save money because they don’t remortgage enough times to make it worthwhile. According to calculations in the report, a homeowner typically needs to remortgage at least six times to benefit financially compared to taking out a longer-term mortgage with a low Standard Variable Rate (SVR).
Anne Gunther, Chief Executive of Standard Life Bank, said that it was essential the consumers looked beyond short-term rates.
“Our research shows that while consumers are likely to choose upfront discounted rates, they are unwilling to remortgage enough times to make it financially worthwhile. When people are considering taking out a new mortgage they should look beyond the short-term rate and check how the SVR stacks up too. The report is clear in its conclusions that for most people a competitive SVR will be the most beneficial over the long term. Longer term fixed rates should also be considered, given the certainty they bring.
“It is imperative that as an industry we work with government to ensure that consumers are given all the information to make the best long-term financial decisions they can. For those who want to take advantage of short-term deals we should help ensure they understand how often they will need to remortgage, but for those who are unlikely to remortgage five or six times we need to provide mortgages with real long-term value.”
