Mortgagees 'ignorant to the rate they are paying'

At least three million UK borrowers do not know the rate of interest at which they are currently repaying their mortgage, it has been reported.

Post Office Mortgages reports that 28 per cent are ignorant to the current cost of their deal.

The lender reports that 35 per cent of borrowers are currently repaying their mortgage at their lender's standard variable rate SVR, despite the availability of cheaper mortgages elsewhere.

Post Office personal lending director Marco Hughes said people who stay on their current SVR are "much more vulnerable to interest rate rises".

He added: "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 claimed that if homeowners are considering switching mortgage provider, now is the time to do it before the Bank of England increases its base rate.

The Bank's Monetary Policy Committee has frozen interest rates at 0.5 per cent since March 2009, in a bid to alleviate the effects of the recession.

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2010-03-04 13:11:11 © Moneyextra.com