The wide majority (82 per cent) of people who chose to remortgage in March did it to get a better deal and switched lenders at the same time, new research from LMS shows.
Just 3 per cent were persuaded by their existing lenders to stay and get a better remortgage deal from them.
Over two-thirds (68 per cent) of customers wanted a lower-rate deal, while around a quarter (23 per cent) of them chose to change their current arrangement to fund home improvements.
Nearly a third (29 per cent) of remortgagers increased the size of their loan, with 22 per cent increasing their loan amount by as much as £10,000. These numbers have however, fallen from last month by 2 per cent and 1 per cent respectively.
In addition, almost two-fifths (38 per cent) remortgaged to reduce their monthly payments by up to £500 to free up cash. This was down from 40 per cent last month, suggesting budgets might not be as stretched as previously.
There has only been a slight increase in the number of people who believe interest rates will increase to 17 per cent in March, which may explain current apathy towards remortgaging with borrowers believing competitive rates will be around for the long haul. The latest LMS remortgage report found that the average mortgage term increased by six months despite the record low rates on offer.
The proportion of people who sought professional advice for their remortgaging and spoke with an independent mortgage adviser or broker increased to 39 per cent in March, from 36 per cent in February.
Andy Knee, chief executive of LMS, commented:
“Savvy borrowers are shopping around for better deals and are clearly aware of the competitive offerings in the market. They’re also seeking out more broker advice than they were in February. However, it’s baffling why their existing lenders are not incentivising them to stay. The switching trend appears to be shaping up in other banking arenas as well, with the Payments Council reporting 1.1 million customers switching current accounts recently.
“With economic growth slowing down in March – almost half of what it was three months ago – it’s important to remember that we’re still on the path to economic recovery. We’re not there yet, but what we’re looking at now is a wiser, post-recession consumer shaped by almost a decade of austerity, which is something lenders need to consider in order to retain their customers.
“A gradual growth in the number of people remortgaging to access better rates is a promising sign that buyers are applying the same wisdom to their mortgages; however, there is still an element of complacency among those who expect competitive offers to last for a while yet. Although people are remortaging for the right reasons, they’re clearly not remortgaging enough.”
