OVER 600,000 PAYING MORTGAGE LOYALTY PENALTY –  YOUR MONEY

Around 630,000 mortgage borrowers are paying a loyalty penalty, adding an average £1,000 to annual bills.

Analysis of 165,000 budgets of people who approached Citizens Advice for debt help revealed 8% of people, or 11% of fixed rate mortgage customers, have come to the end of their fixed rate deal and have not switched.

This means they are “overpaying” as they will be paying the pricier Standard Variable Rate (SVR).

The Financial Conduct Authority (FCA) has previously estimated that mortgage customers on SVRs could be overpaying by £1,000 a year on average. The research was last done in 2020 so this figure could be higher off the back of the recent rate hikes.

The report by Citizens Advice also found that 23% had struggled with mortgage repayments while 38% had lost sleep over their finances.

Citizens Advice highlighted that the FCA had made voluntary agreements with firms to give existing customers on reversion rates a chance to move to a new deal if they met certain criteria, but the charity said this “doesn’t go far enough”.

It said that to avoid paying the SVR, customers needed to switch before the end of the fixed rate term, but many people did not.

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