82% of borrowers who remortgaged in March did so to switch lenders to get the best deal available to them, according to research from LMS.
However, just 3% were incentivised by their existing lender to stay with them, a sign that lenders could be doing more to try and keep existing customers.
68% of those who remortgaged their properties in March did so in order to access lower mortgage rates, up from the 65% who did so in February.
29% of remortgagers increased the size of their loan, with 22% increasing their loan amount by as much as £10,000. These numbers have however, fallen from last month by 2% and 1% respectively.
In addition, 38% remortgaged to reduce their monthly payments by up to £500 to free up cash. This was down from 40% last month, suggesting budgets might not be as stretched as previously.
Remortgaging also meant that 23% were able to fund home improvements, and 11% could pay off other debts. A small number of homeowners also said they planned to use the money to fulfil their children’s ambitions of owning their home (2%).
There has only been a slight increase in the number of people who believe interest rates will increase to 17% in March, which may explain current apathy towards remortgaging with borrowers believing competitive rates will be around for the long haul. The latest LMS remortgage report found that the average mortgage term increased by six months despite the record low rates on offer.
39% of remortgagors have spoken with an independent mortgage adviser or broker, up from 36% in February.
Andy Knee (pictured), 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.”