Standard Variable Rate important factor for borrowers

Mortgage borrowers whose deals are coming to an end will spend more time shopping around and will be more interested in rates and fees than they were a year ago, according to research by Nationwide Building Society.

Over half (53%) say they are more interested in the rate they come to at the end of their mortgage deal than they were this time last year. This may well be because a quarter (25%) of respondents expect to pay their lenders' standard variable rate (SVR) for longer than they would have done in the past;

Over half (56%) say they are more likely to shop around for a new deal now than they were this time last year;

64% say that the cost of the fee is just as important as the rate on offer.

Martyn Dyson, head of mortgages at Nationwide, said: "It's more important than ever for borrowers to shop around for the best mortgage deal overall and not just settle for the cheapest headline rate. Borrowers should consider the overall combination of headline rate, fee and the lenders' SVR."

Fixed rate mortgages more popular than before

The research also showed the growing importance of fixed rate products offering long term payment security:

nearly half of borrowers (44%) say they would be more likely to look for a fixed rate mortgage than they would have been last year;

43% say they are now more likely to consider a longer term fixed rate such as five years or more.

Martyn Dyson, head of mortgages at Nationwide, said: "In the current climate, it's not surprising that more people are looking to fix their mortgage rate for longer. As a building society we always aim to offer our members the best possible deals, which is why we recently announced further price cuts to our two, three and five year fixed rate deals by an average of 0.60% over the period."

Ability to switch between products is most important

However, there is clearly still a great deal of uncertainty as to what will happen to rates in the future. 8 out of 10 people say they would be more interested in a mortgage which allowed them to switch between products without penalty than they would have been last year.

Martyn Dyson, head of mortgages at Nationwide, said: "We recognise that borrowers want the security of being able to opt-out from their tracker should their circumstances change or interest rates rise which is why we provide a switch and fix facility. This enables customers to switch from their tracker mortgage before the end of their deal to a fixed rate product without incurring early repayment charges."

For more information, visit nationwide.co.uk