One in seven homeowners who tried to remortgage in the past two years failed to secure a new deal either with their existing lender or a new lender, according to new research from Nottingham Building Society.
The main reasons for rejection were tighter affordability rules under new mortgage market regulations and issues with credit records, the study revealed.
However, 11 per cent said they were turned down for being too old.
Rejection ended up costing ‘mortgage prisoners’ who couldn’t remortgage, with just over a quarter seeing their monthly payments increase, while 8 per cent saw substantial rises in costs.
Ian Gibbons, senior mortgage broking manager for Nottingham Mortgage Services (NMS), which is part of the building society, said: “With rates remaining low it is potentially a good time to remortgage to a new deal, but unfortunately it is not always that simple.
“With more than a quarter of those who have tried to remortgage in the past two years not being able to secure a new deal it is clear that homeowners need to think carefully and research the market.
“People’s circumstances change and seeking help from a broker to get an independent view on the best deal available to a customer is a very sensible approach.”
Bank of England statistics revealed that potential savings are substantial for remortgaging, with the average standard variable rates at 4.5 per cent cut to 1.9 per cent.
This could lead to savings of around £430 a month on a £200,000 deal.
Data from the Council of Mortgage Lenders shows the number of remortgage loans hit 31,000 in September with a total of £5.1bn, compared with £4.3bn and 27,900 a year ago.
Analysts warn that homeowners who cannot remortgage end up missing out on much lower rates.
Nottingham Building Society advised people to think carefully before securing debts against their home, as the property could be repossessed if homeowners fail to keep up repayments on a mortgage.
katherine.denham@ft.com
