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Most remortgage for lower rates

Adam Williams
Written By:
Adam Williams
Posted:
Updated:
01/05/2015

More than two-thirds of people who remortgage do so to access lower rates.

Research from LMS found 68% of remortgage customers were seeking to cut their monthly payments and move to a lower rate. This figure is three percentage points higher than a month ago.

The study also found a quarter of people (23%) wanted to take cash out of their property to fund improvements to their home. A tenth of people (11%) wanted to use the extra cash to pay down other debts.

Around one-in-five (22%) borrowers increased the size of their loan by £10,000 or more, but this was slightly down month-on-month.

Most people found their current lender offered them little incentive to stay, with just 3% of respondents saying they had received the offer of a new rate from their current provider.

The survey found only 17% believe interest rates will rise in the near future.

Andy Knee, chief executive of LMS, said: “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.”


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