Business life: My finance news blog

New research has suggested that people don’t understand the value of a one per cent difference in mortgage rates.

According to Nationwide Building Society, a one per cent difference in rates on a five-year fixed rate mortgage could be worth over ?4,000.

But when presented with the details of two five-year mortgage deals, 28 per cent of respondents said they thought the difference on a ?120,000 mortgage with an interest rate at 5.6 per cent compared to 6.6 per cent would be between ?500 and ?2,000.

A total of 23 per cent had no idea at all while 25 per cent were able to identify the correct difference.

When it comes to mortgages, men have the edge over women - 33 per cent of men answered correctly compared to 18 per cent of women.

Older age groups also did better, 31 per cent of 55 to 64-year-olds guessed correctly while 16 per cent of 18 to 24-year-olds were right.

Matthew Carter, Nationwide Building Society’s divisional director for mortgages, said: “People’s lives are busier than ever in the run up to the festive season and, as a result, they may be less inclined to shop around for the best deal.

“The temptation may be to take a slightly higher rate as an easier, less hassle option freecreditscore. But, as our research shows, most people don’t understand the impact that just a one per cent difference can make, meaning they could be wasting thousands of pounds.”

sourse