Homeowners urged to shop for mortgages
Wednesday, 03 Sep 2008 08:40
Homeowners urged to shop for mortgages
British homeowners have been left "confused and concerned" with regard to their mortgage options as a result of the credit crunch, preventing them from shopping around for a new deal.
Cheltenham & Gloucester finds many homeowners risk remortgaging to a less competitive rate with their current lender, or being automatically transferred to a lenders' standard variable rate (SVR) at the end of a deal.
Indeed as many as one in three remortgagers believe they have no option but to stick with current lender when their mortgage expires, curtailing the options open to buyers.
Fear is also another factor which prevents homeowners from shopping around for a new deal, with 37 per cent of those looking to remortgage in the next year saying they will not even approach another lender for fear of rejection.
"In a climate of low confidence, homeowners are less willing to shop around for a new mortgage," explained C&G marketing director, Stephen Noakes.
"Fear of their application being rejected, the belief they will have no choice of deals and a lack of understanding of how lenders look at eligibility are all contributing to this reluctance."
Top of the list of concerns for remortgagers is the perceived scarcity of deals (44 per cent), followed by worry that they won't be able to afford their new mortgage rate, a concern for 38 per cent of borrowers.
A further 27 per cent do not want to tie themselves into a new deal now when they believe rates will eventually drop.
However, despite these concerns, over one third of remortgagers will spend less than half a day shopping around for a new deal.
"There is no denying there are fewer deals available, but the perception is worse than it is," added Mr Noakes.
"Industry figures show that there are around 5,000 different mortgages available and the average remortgager owns over half of the equity in their property.
"So for the majority of people, there is still plenty of choice."