Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Stock Market FOMO Hits September CRASH Brick Wall - Dow Trend Forecast 2021 Review - 20th Sep 21
Two Huge, Overlooked Drains on Global Silver Supplies - 20th Sep 21
Gold gets hammered but Copper fails to seize the moment - 20th Sep 21
New arms race and nuclear risks could spell End to the Asian Century - 20th Sep 21
Stock Market FOMO Hits September Brick Wall - Dow Trend Forecast 2021 Review - 19th Sep 21
Dow Forecasting Neural Nets, Crossing the Rubicon With Three High Risk Chinese Tech Stocks - 18th Sep 21
If Post-1971 Monetary System Is Bad, Why Isn’t Gold Higher? - 18th Sep 21
Stock Market Shaking Off the Taper Blues - 18th Sep 21
So... This Happened! One Crypto Goes From "Little-Known" -to- "Top 10" in 6 Weeks - 18th Sep 21
Why a Financial Markets "Panic" May Be Just Around the Corner - 18th Sep 21
An Update on the End of College… and a New Way to Profit - 16th Sep 21
What Kind of Support and Services Can Your Accountant Provide? Your Main Questions Answered - 16th Sep 21
Consistent performance makes waste a good place to buy stocks - 16th Sep 21
Dow Stock Market Trend Forecasting Neural Nets Pattern Recognition - 15th Sep 21
Eurozone Impact on Gold: The ECB and the Phantom Taper - 15th Sep 21
Fed To Taper into Weakening Economy - 15th Sep 21
Gold Miners: Last of the Summer Wine - 15th Sep 21
How does product development affect a company’s market value? - 15th Sep 21
Types of Investment Property to Become Familiar with - 15th Sep 21
Is This the "Kiss of Death" for the Stocks Bull Market? - 14th Sep 21
Where Are the Stock Market Fireworks? - 14th Sep 21
Play-To-Earn Cryptocurrency Games Gain More and Is Set to Expand - 14th Sep 21
The CashFX TAP Platform - Catering to Bull Investors and Bear Investors Alike - 14th Sep 21
Why every serious investor should be focused on blockchain technology - 13th Sep 21
SPX Base Projection Reached – End of the Line? - 13th Sep 21
There are diverse ways to finance the purchase of a car - 13th Sep 21
6 Tips For Wise Investment - 13th Sep 21 - Mark_Adan
Gold Price Back Below $1,800! - 10th Sep 21
The Inflation/Deflation debate wears on… - 10th Sep 21
Silver Price seen tracking Copper prices higher - 10th Sep 21
The Pitfalls of Not Using a Solicitor for Your Divorce - 10th Sep 21
Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
This Boom-Bust Cycle in US Home Ownership Should Give Home Shoppers Pause - 9th Sep 21
Stock Market September Smackdown Coming Next? - 9th Sep 21 - Monica_Kingsley
Crazy Crypto Markets How to Buy Bitcoin, Litecoin for Half Market Price and Sell for TRIPLE! - 8th Sep 21
Sun Sea and Sand UK Holidays 2021, Scarborough in VR 180 3D! - 8th Sep 21
Bitcoin BTC Price Detailed Trend Forecast Into End 2021 - 8th Sep 21
Hyper Growth Stocks - This billionaire is now using one of our top strategies - 8th Sep 21
6 common trading mistakes to avoid at all costs - 8th Sep 21
US Dollar Upswing, S&P 500 and Nasdaq Outlook - 7th Sep 21
Dovish Assassins of the USD Index - 7th Sep 21
Weak August Payrolls: Why We Should Care - 7th Sep 21
A Mixed Stock Market - Still - 6th Sep 21
Energy Metals Build Momentum; Silver & Platinum May Follow - 6th Sep 21
What‘s Not to Love About Crypto Market Fireworks - 6th Sep 21
Surging US Home Prices and Gold – What’s the Link? - 6th Sep 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Poor Understanding of Monetary Value of 1%

Personal_Finance / Debt & Loans Nov 28, 2007 - 04:00 AM GMT

By: Nationwide

Personal_Finance Research from Nationwide Building Society reveals that 75% of people in the UK don't understand the monetary value a 1% difference in mortgage rates can make. A 1% difference in rates on a five year fixed rate mortgage deal could be worth over £4,000*. When given details of two five year mortgage deals to compare, the largest group of respondents (28%) said they thought the difference on a £120,000 mortgage with an interest rate at 5.6% compared to a rate of 6.6% would be between £500 and £2000. Another 23% said they had no idea at all. Only 25% of people correctly identified that the difference could be £4,000.


The research also showed that:

  • Men are more mortgage savvy than women. 33% of men answered correctly compared to less than a fifth of women (18%);
  • Experience counts! 31% of those aged 55-64 guessed correctly the true value compared to just 16% of those aged 18-24;
  • The South-East, Midlands and Scotland had the highest regional score. 28% percent of people in these regions knew the difference compared to their counterparts in Wales and the South West where only one in five people (19%) were right.

If by shopping around, a consumer finds a mortgage deals that saved £4,000, this could cover the costs of:

  • The majority of a household's annual council tax or utility bills: an extra £800 a year would cover a significant proportion of an average £1,100 a year council tax bill or £1,200 a year utility bills;
  • £65 extra a month towards grocery shopping;
  • £800 a year towards mortgage overpayments;
  • An extra holiday a year.

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. But, as our research shows, most people don't understand the impact that just a 1% difference can make, meaning they could be wasting thousands of pounds.

"We therefore urge borrowers to make time to shop around and compare the total costs over the life of a deal before making a final decision. After all, a £4,000 plus saving on a 5 year deal for a couple of hours of work is a pretty good return!"

Example of cost savings on 5 year fixed rate mortgages:

Remortgage, switcher and additional borrowing:

Lender Rate Reservation fee Monthly payment Difference in rate to Nationwide Saving with Nationwide over 5 year deal period
Nationwide 5.63% £499 £754 - -
NatWest 6.54% £699 £806 + 0.91% £3,151
Halifax 6.89% £499 £827 + 1.26% £4,393
Northern Rock 7.29% £495 £851 + 1.66% £5,832

Rates correct as at 23.11.2007

Home mover:

Lender Rate Reservation fee Monthly payment Difference in rate to Nationwide Saving with Nationwide over 5 year deal period
Nationwide 5.63% £499 £737 - -
HSBC 6.29% £499 £785 + 0.66% £2,864
Halifax 6.69% £499 £814 + 1.06% £4,642
Northern Rock 7.29% £495 £860 + 1.66% £7,363

Rates correct as at 23.11.2007

Contact information:

Zoe Stevens, 01793 655423, zoe.stevens@nationwide.co.uk
Natalie Tate, 01793 655354, natalie.tate@nationwide.co.uk

Notes:

*Based on £120,000 repayment mortgage over 25 year term.
Cost of five year deal at 5.6% = £44,645. Cost of deal at 6.6% = £49,066. £49,066-£44,645 = £4,421

Remortgage competitor comparison table - assumptions
Rates correct as at 23.11.07. Savings are based on an average loan size of £102,282, an LTV of 75%, and a term of 18 years. Any difference in reservation fee has not been included in the savings above.

Home mover competitor comparison table - assumptions
Rates correct as at 23.11.07. Savings are based on an average loan size of £118,573, an LTV of 75%, and a term of 25 years. Any difference in reservation fee has not been included in the savings above.

Full survey results:

Q. Based on a repayment mortgage of £120,000, approximately how much do you think the difference in total repayment over 5 years would be for a mortgage with an interest rate of 5.6%, compared to a mortgage with an interest rate of 6.6%?

 

 

Results by gender

 

Total

Male

Female

£500 or less 5% 4% 6%
£500 - £2,000 28% 28% 28%
£2,000 - £4,000 19% 19% 20%
More than £4,000 25% 33% 18%
Don’t know 23% 16% 29%

 

Regional results

 

South East

Midlands

North England

Wales & South West

Scotland

£500 or less 6% 4% 6% 4% 6%
£500 - £2,000 28% 27% 30% 28% 25%
£2,000 - £4,000 20% 20% 21% 15% 16%
More than £4,000 28% 28% 22% 19% 28%
Don’t know 19% 21% 21% 33% 26%

 

Results by age

 

18 - 24

25 - 34

35 - 44

45 - 54

55 - 64

65+

£500 or less 2% 11% 5% 5% 4% 4%
£500 - £2,000 35% 33% 30% 23% 27% 22%
£2,000 - £4,000 22% 17% 26% 18% 13% 18%
More than £4,000 16% 25% 22% 30% 31% 25%
Don’t know 25% 13% 18% 24% 26% 30%

http://www.nationwide.co.uk/


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in