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Borrowers fail to take up mortgage switching deals

Borrowers fail to take up mortgage switching deals

Only just over a quarter (28 per cent) of British mortgage borrowers have ever switched provider in search of a better deal, according to research from online mortgage broker Trussle.

The study of over 4,000 people, carried out on behalf of the company by YouGov, found that mortgage holders were more than twice as likely (63 per cent) to have switched energy provider, than their current mortgage lender, despite the annual savings from doing so being far lower. 

Switching energy provider can lead to savings of around £200 a year, compared to the £2,800 the average UK household pays additionally by not shopping around for the best mortgage. 

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In August, the Bank of England cut the base rate for the first time in seven years, to 0.25 per cent, prompting a wave of mortgage rate reductions from lenders.

The initiative was designed to put more money in the pocket of consumers, however, millions of borrowers are still failing to reassess their mortgage, with  94 per cent not considering switching to a better deal since the base rate was lowered.

Ishaan Malhi, chief executive and founder of Trussle, said: “It’s shocking that almost three quarters of mortgage borrowers have never switched provider in search of a better deal.







 

"Especially as households across the UK are throwing away thousands of pounds every year by failing to take advantage of the best rates on the market."

He said part of the problem is a lack of awareness.

"But many borrowers are simply reluctant to face the ordeal of switching. However, mortgage rates have fallen to record lows, and technology is making switching mortgages easier than ever. Now’s the time for borrowers to take charge of the situation."

The online survey, that consisted of 4,141 adults questioned between 21 and 25 October this year, stated that respondents were also far more likely to have switched car insurer (60 per cent) and mobile phone provider (42 per cent) than mortgage lender.

When asked what had stopped them switching mortgage, one in five borrowers said they feared the process would be too much hassle, while 14 per cent claimed it was too complicated. 

Around one in seven (15 per cent) claimed they haven’t switched because they thought they would be penalised for doing so, while just 7 per cent said they stayed with their current lender out of loyalty.

Michelle Lawson, director at Fareham-based Lawson Financial, said: "There will be improvements now lenders are starting to allow brokers to do this as part of their service. Lenders take the business from a broker but then shut us out to be able to help the client further without having a third party authority in place. 

"This process should be made easier, but also the energy companies tell clients when a cheaper tariff is available and it is a very easy swap.  

"We also need to be paid to do this though, to make it fair as we could equally look at remortgaging the clients away from their current provider to a new lender. You have to remember that all the majority of brokers want is the best outcome for their clients."