More than 5 million people in Britain have no idea how much their mortgage is costing them, according to research from digital broker Habito.
With 7.6 million active mortgages in Britain, the study found one-third of borrowers did not know what interest rate they were paying.
Habito - which launched in April, claiming to be the world’s first digital mortgage adviser and promising to find borrowers the best deal within around half an hour - suggested this could be because of the complexity of the mortgage application process and a reluctance to manage mortgages effectively over the long-term.
The firm commissioned YouGov to survey 4,236 adults, of which 1,258 were mortgage owners and 33 had a mortgage through shared ownership, at the start of this month.
| Research findings: |
| One in eight did not know if they had an interest only mortgage |
| Almost one in ten did not know if their mortgage was a fixed or variable rate |
| Almost one in ten did not know how long their mortgage term was |
| One in 20 mortgage holders could not name their lender |
Mortgage holders in Wales are most aware (79 per cent) when it comes to knowing what interest rate they are paying on their mortgage, compared with 65 per cent of mortgage holders in London and 63 per cent in the south east, where house prices are often higher.
The research also revealed a stark gender gap, with 61 per cent of women knowing how much interest they pay on their mortgage, compared to 73 per cent of men.
Daniel Hegarty, founder and chief executive of Habito, said: “For most people, a mortgage is the biggest financial commitment of their lives, yet the application process is opaque, slow and untouched by technology.
“It’s no wonder there is such a widespread lack of awareness among existing mortgage holders and such reluctance to manage their mortgages over the long-term.”
Danny Matthews, a broker at Total Mortgage Network, said that while companies like Habito and Trussle represent the future of mortgages, where they are going wrong is they underestimate the power of education.
“The figures in the research are utterly shocking, but is also what I hear with my clients. The only way is to educate the UK on mortgages. Not enough is being done by companies, small and large which could ultimately bring them business.
“Content, social and online media is a gateway to transparency. This is the future - it’s just not evenly distributed yet.”
peter.walker@ft.com
