UK 'oblivious' to effect of mortgage rates

Three-quarters of people in the UK do not understand how a one per cent difference in mortgage rates would affect their loan, according to new research.

Nationwide Building Society explains that a difference of one per cent on a five-year fixed-rate mortgage could equate to more than £4,000, but that 28 per cent of people think it would only be worth between £500 and £2,000.

Nearly one quarter - 23 per cent - admitted they had no idea what a one per cent increase of decrease in rates would be in monetary value.

"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," said Matthew Carter, divisional director for mortgages for the building society.

This may mean many borrowers just accept a higher rate in exchange for "less hassle", he added.

Experian's latest personal credit index found that 77 per cent of people with a mortgage could not give an accurate definition of what annual percentage rate, or APR, is.

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