Are you clued up on what impacts your monthly mortgage payments? A new study by Barclays Bank reveals that many of us are totally lost when it comes to understanding the factors influencing our mortgage rates.
While almost everyone (88%) has heard of the Bank of England Base Rate, over a quarter (26%) admit they don’t actually understand what it means. Even more shockingly, 35% have never even heard of the Monetary Policy Committee – the people responsible for setting the base rate!
And if you’ve never heard of ‘swap rates’, you’re not alone. Nearly half of us (49%) are in the dark about these figures, which are actually crucial in determining the pricing of fixed-rate mortgages.
We’re getting more interested in the mortgage market
There is hope, though. It seems the cost-of-living crisis and recent interest rate rises have encouraged people to become more financially savvy. 15% of renters and homeowners say they are paying more attention to financial news than they were last year, particularly those aged 18 to 34 (22%).
When it comes to finding information, most people (31%) turn to news coverage to understand the impact of the Base Rate. Consumer advice websites are the next most popular source (27%), closely followed by mortgage providers (25%).
Interestingly, a significant number of younger people (18 to 34-year-olds) rely on friends and family (25%) and social media (25%) for their mortgage knowledge. In contrast, only 4% of those over 55 go to these sources.
Barclays encourages homeowners to stay informed
A spokesperson for Barclays commented: “The recent base rate reduction on August 1st was positive news for homeowners, with over half of consumers feeling more confident about their household finances.”
However, the spokesperson warned, “Unless you’re on a variable or tracker mortgage, you might not see a change in your monthly payments straight away. Those on fixed-rate deals will need to wait until their current deal ends to benefit from the lower rate.”
They added: “While you don’t need to be a financial expert, staying informed about the mortgage market can help you make the best decisions for your personal circumstances.”