Borrowers 'do not know mortgage rate'

By Jonathan Dawes, Thu 4 Mar 2010 - Published in Mortgages

A new poll has found that at least three million people do not know what interest rate is being applied to their mortgage.

The survey, carried out by the Post Office, showed that 28 per cent of respondents, or the equivalent to more than three million homeowners, could not name the current mortgage rate.

Furthermore, the report discovered that 35 per cent of mortgage holders are paying their lender's standard variable rate (SVR), although 29 per cent of these do not know its exact level and are assuming it is one of the lowest on the market.

Marco Hughes, personal lending director at the Post Office, said many people consider staying on their SVR as it is the easiest option, but pointed out that it leaves them vulnerable to interest rate rises.

"Some providers have increased their SVRs quite significantly even though the Bank of England base rate has not moved and as a result many borrowers are seeing their monthly mortgage repayments increase more quickly than they thought," he added.

Recently, the Royal Institution of Chartered Surveyors claimed the UK was one of just five European countries which saw house prices rise in 2009.

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