Consumers reluctant to switch mortgage lender

June 17, 2008

A recent report has shown that many UK homeowners are reluctant to switch their mortgage lender, even in cases where their existing mortgage becomes difficult to afford. The data shows that even where borrowers have been on a cheap introductory deal that has come to an end, and they are left facing the financial implications of moving onto the lender’s standard variable rate, they are often reluctant to switch to another mortgage lender in order to get a better deal.

One industry official stated: “Loyalty should be rewarded but the millions of mortgage customers who have never moved lender are potentially paying a massive price for not searching the market.” He also said: “Many may be deterred by the fear they will have to pay high fees to move but the reality is that they can make significant savings.” The survey was carried out by mform.co.uk.

Interest rates have rocketed since August 2006, with five rises of 0.25% each taking the base rate from 4.5% to 5.75%. For many homeowners this has resulted in rocketing mortgage repayments, and has left many struggling financially. However, although many lenders have put their interest rates up to over and above the rises from the Bank of England, there are some lenders that are still offering affordable mortgage deals to try and encourage customers.

There are also many homeowners that are due to come off cheap fixed rate deals over the coming months, and many could see their repayments shoot up by as much as 40% if they revert to the lender’s standard variable rate, which could equate to hundreds of pounds extra each month. Experts warn that it is vital these people start looking around for a cheaper alternative to avoid financial hardship and the risk of repossession.

Recent additions:

  • October 2007 saw homeowners struggle with mortgage payments
    • Mortgage payers in the UK encountered a difficult month in October when it came to making mortgage repayments according to recent data from the Council of Mortgage Lenders. High interest rates and property prices, coupled
  • House price growth could grind to halt in 2008
    • According to officials from the Nationwide Building Society 2008 could see house price growth grind to a halt in the UK. The building society states that there is to be a 'significant slowdown' in house
  • Are discount mortgages a good choice?
    • From fixed rate mortgages to a tracker mortgage, and from interest only mortgages to buy to let mortgages, the world of mortgage loans has become more complex than ever these days, with a wide range
  • Borrowing rates still rise despite base rate cuts
    • There have been three base rate cuts since December of last year, with the Bank of England reducing rates by 0.25% each time, taking the base rate from 5.75% to 5%. Over the past couple
  • Borrowers getting fleeced on fees
    • It seems that the average borrower looking for a mortgage simply cannot win these days. Even though house prices are coming down, which should have been good news for first time buyers looking to get

Posted by admin | Filed Under General, Mortgages 

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One Response to “Consumers reluctant to switch mortgage lender”

  1. Borrowers getting fleeced on fees on July 6th, 2008 8:31 am

    [...] Consumers reluctant to switch mortgage lender [...]

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