UK households are throwing away £2.2 billion each year by paying over the odds on their mortgages, according to new figures released by the Consumers’ Association today.

Mortgage payments are often the biggest monthly outgoing for a household with the average monthly repayment standing at £391. Households with a standard variable rate (SVR) mortgage who switch to a good value deal could save as much as £475 a year on an average £58,000 mortgage.

People with a standard variable rate (SVR) mortgage are most likely to save most. These people are most likely to be paying a higher rate and could benefit from shopping for a new mortgage say the association, promoting it’s Switch with Which? web site. Which? estimates that approximately one third of mortgages are charged at the SVR.

However, one advantage SVR deals have is that they tend not to have redemption penalties attached to them says the association. These penalties can tie customers into expensive loans for years.

Lenders often reserve their best, low rates for new customers and, when the introductory deal runs out, the customer is put onto a higher rate.

The Miles review into long-term mortgage deals, published in December 2003, highlighted this pattern of short-term introductory rates in the UK marketplace.

A combination of inertia and complexity stops people changing their mortgage and saving money, says Which?