Mortgage holders who have come to the end of their current mortgage deal and are free to leave, appear more sensitive to a rise in their monthly payments than a rise in the Bank of England Base Rate, according to research from first direct.

When asked how likely various rate rises or payment increases would be to encourage them to look for a new mortgage deal 10% would definitely look if interest rates rose by 1%, but four times as many would do the same if they saw an increase of £100 in their monthly payments.

First director says this trend indicates that SVR mortgage holders are very likely to experience payment shock as rates do begin to rise. 41% of those on the lookout to move mortgage in the next 12 months would definitely look for a new deal if their monthly payments rose by £100 and of those not planning to be active in the next 12 months 35% made the same claim. Only when faced with an interest rate rise of 3% did a similar proportion of ‘free to leave’ mortgage holders state that they would definitely look for a new deal.

‘Free to leave’ homeowners appear keen to fix but are extremely rate sensitive and all plumped for a shorter term fix at a lower rate when asked to compare various options.

The majority of inactive mortgage holders (those with no current plans to move or remortgage) are happy on their current SVR, enjoying the benefits of low monthly mortgage payments and have few incentives to leave. An increase in their monthly payments rather than a rise in interest rates is more likely to knock these consumers out of their inertia. If payments increased by up to £100 per month, over 37% of respondents would look for a new deal, but an interest rate rise of 2% would have the same impact on only one in six.

Half of those with no intention to be active said that they would switch lenders for a saving of £100 per month.

Worryingly, 36% of inactive mortgage holders don’t know what their current interest rate is.

Richard Tolchard, senior mortgage product manager at first direct, said: “It’s easy to see why homeowners enjoying the benefits of a low variable rate might be unwilling to volunteer for an increase in their monthly payments by moving to a fixed rate now. The upside is that those who move now could be laughing in the end.