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Concerned homeowners urged to shop around for mortgage deals
The crisis of confidence in the economic climate has left homeowners confused and concerned about switching lenders when they remortgage, according to new research from Cheltenham & Gloucester. As a result, many risk remortgaging to a less competitive rate with their current lender, or being transferred automatically to their lender's standard variable rate when their deal expires.
The lender surveyed homeowners due to remortgage within the next year and found the worry of not getting a new mortgage will prevent them from shopping around. One in three (37%) said they will not even approach other lenders for fear of being rejected. Of this figure, 40% believe they have no option but to convert onto their lender's standard variable rate. And 30 per cent of all remortgagers said they would prefer to knowingly pay a higher rate with their current lender than face being turned down by other lenders.
Top of the list of concerns for remortgagers is the perceived scarcity of deals (44%), 38% worry that they won't be able to afford their new mortgage rate, while 27% don't want to tie themselves into a new deal now when they believe rates will eventually drop. Fifteen per cent don't understand how lenders decide whether someone is eligible for a new mortgage. Despite these concerns, over one third (38%) of remortgagers will spend less than half a day shopping around for a new deal.
Stephen Noakes, C&G marketing director, said: "In a climate of low confidence, homeowners are less willing to shop around for a new mortgage. Fear of their application being rejected, the belief they will have no choice of deals and a lack of understanding of how lenders look at eligibility are all contributing to this reluctance.
"There is no denying there are fewer deals available, but the perception is worse than it is. Industry figures show that there are around 5,000 different mortgages available and the average remortgager owns over half of the equity in their property. So for the majority of people, there is still plenty of choice.
"Mortgage rates are now falling and remortgagers should take the opportunity to shop around before committing to a new deal. Doing nothing could mean you end up paying far more than necessary." |