Mortgage borrowers in Scotland more likely to switch to a better deal

Mortgage borrowers in Scotland are more likely to switch to a better deal than those living elsewhere in the UK, new research has revealed.

According to online mortgage broker Trussle, 41% of people in Scotland with a mortgage said they had switched provider to secure a more favourable deal at the end of a fixed period, closely followed by East England (39%) – considerably higher than the 28% average across the UK.

Those in the West Midlands are most likely to be on an expensive standard variable rate – the default rates that borrowers often find themselves on as soon as an initial rate has ended – with just one in 10 (11%) having ever switched mortgage for a more attractive rate.

Trussle said that this could be because of loyalty to one lender, as people from the West Midlands were more likely than any other region to cite this as a reason for not switching, with a quarter of borrowers (25%) doing so. Just 14% of borrowers in Scotland said loyalty had prevented them remortgaging.

Those in the East Midlands (23%), North West (25%), North East (25%), Yorkshire (26%) and South East (27%) were also below average when it came to mortgage switching.

The Bank of England cut the base rate for the first time in seven years to 0.25% in August, prompting mortgage lenders to slash rates.

Recent research from Trussle found that only one in four homeowners understand how base rate cuts could affect their mortgage payments, which could explain why some people are not switching.

Three million people in the UK are currently on a standard variable rate and are potentially missing out on saving thousands pounds every year by failing to switch to a cheaper rate.

As a result of the widening gap between the best and worst rates on the market, people stuck on expensive standard variable rates could potentially save £3,500 per year by switching to a market leading fixed rate, according to Trussle.

Ishaan Malhi, CEO and founder of Trussle, said: “The majority of homeowners across the country have never switched mortgage provider to secure a better deal, and that’s a worry. When you consider that only two in five people have remortgaged to reduce their repayments in Scotland, the most proactive region of mortgage switchers, you start to appreciate the scale of the challenge we face as a nation.

“December saw more homeowners switch mortgage than any other month during the last eight years, thanks to historically low interest rates, but these people still represent a small fraction of those eligible to switch to a more suitable deal. Much of the complexity and hassle has been eliminated from the switching process as lenders and brokers start to embrace technology. This makes it an ideal time for the remaining three million UK homeowners paying their lender’s Standard Variable Rate to start thinking about switching to a more suitable mortgage deal.”

Percentage of UK borrowers that have switched mortgage