SVR homeowners could save £330 a month with fixed rate switch

As the Bank of England recently cut the base rate from 5.25% to 5%, new analysis by Compare the Market has found that homeowners on a standard variable rate (SVR) mortgage could save up to £330 a month by switching to a fixed rate deal, the equivalent of £3,960 a year.

As interest rates have started falling following the Bank of England decision, homeowners may be able to save more by shopping around for mortgage deals, rather than opting for an SVR deal when their initial mortgage term comes to an end.

Switching from the current average SVR (8.16%) to the average five-year fixed mortgage rate (5.38%) could result in up to £3,960 in savings per year. Similarly, switching from the current average SVR rate to the average two-year fixed rate (5.77%) could save homeowners up to £3,432 annually on their mortgage repayments.

Homeowners who are either coming to the end of their initial fixed rate or are already on a SVR might wish to consider what their options may be to get the right deal for their circumstances. The Bank of England’s Financial Stability Report shows more than three million people are still paying rates of less than 3%. However, most of these fixed rate deals are set to expire between now and the end of 2026. As these homeowners roll off their fixed rate deals during this time, their mortgage repayments are set to increase by around £180 each month, equivalent to 28%.

Tom Lyon, Money Expert at Compare the Market, said “Households will welcome falling mortgage rates after the recent Bank of England decision. However, fixed rates remain high by historical standards, and borrowers who locked in low rates years ago could face substantially higher mortgage costs if their previous deal expires soon.”

	SVR rate Based on latest Moneyfacts data, August 2024	Two-year fixed rate Based on latest Moneyfacts data, August 2024	Five-year fixed rate Based on latest Moneyfacts data, August 2024
Average interest rate	8.16%	5.77%	5.38%
Monthly repayments Based on a mortgage debt of £178,523  per household and 30-year term	£1,330	£1,044	£1,000
Annual repayments	£15,960	£12,528	£12,000
	Total annual saving compared to SVR:	£3,432	£3,960