LoginSubscribe to Alerts

Why are mortgage borrowers reluctant to switch deals?

Posted 28 November 2016 by Ben Salisbury

New research shows that only 28% of mortgage borrowers switch providers compared to 63% of borrowers who switch to a cheaper energy deal

With mortgage rates at record lows and the Bank of England cutting the base rate for the first time since 2009 to 0.25% in August, only a quarter of mortgage borrowers in the UK have switched providers in order to find a better deal.

The research from online mortgage broker Trussle carried out by YouGov, found that despite the move from the Bank of England, which led to further rate cuts on a range of mortgages by many providers, 94% of borrowers have not considered switching to a better mortgage deal.

The study of over 4,000 people found that mortgage holders were more than twice as likely to switch energy provider as mortgage lenders, with 63% saying they would consider switching gas or electricity supplier, compared to just 28% of mortgage holders who have switched their mortgage.

This is despite the potential savings from switching a mortgage dwarfing those of switching energy provider. Research from the Department of Energy and Climate Change (DECC) found that most households could save at least £200 a year on their energy bills, compared to an average annual saving of £2,800 that research calculated using consumer research carried out by Online Opinions in May 2016 found.

Why are mortgage borrowers reluctant to switch?

The research found that mortgage borrowers were also more willing to switch the company they insure their car with, 60% and mobile phone provider, 42%, than who they pay their mortgage too.

The most popular reason for not switching mortgages was that 20% thought the process would be too much hassle, with 14% saying they thought it would be too complicated. 15% said they hadn’t switched because they thought they would be penalised for doing so, while just 7% said they stay with their current lender out of loyalty.

There are also many borrowers who on current incomes may struggle to be accepted to borrow what they need under the stricter conditions imposed on borrowers and lenders as part of the mortgage market review.

The research found that those in Scotland switched mortgages the most often with 41% saying they had done so, higher than the 29% from London and well above the 16% of borrowers from the Midlands who have switched mortgages.

Ishaan Malhi, CEO 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.

“Part of the problem is clearly 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.”

The research showed that borrowers who have switched mortgages are more likely to switch other financial products such as current accounts. More than a third (37%) of ‘switchers’ have also changed current account, while 80% have changed energy provider. For borrowers who have not switched, these figures were far lower - 17% and 56% respectively.

20 February 2024
Bromford is working with The Mortgage People to advise homebuyers about the best way to a successful mortgage application...Read more
2 February 2024
Ben Thompson, deputy CEO at Mortgage Advice Bureau, shares his top tips to consider before buying a home with a sibling or friend...Read more
31 August 2023
We guide you to ensure the process of buying a second home for yourself or family is as straightforward as possible...Read more
Sign up for email alertsGet the latest properties and updates sent directly to your inbox daily, weekly or immediately you are in control.
Subscribe to Alerts
Search news and advice
Individual savings and affordability may vary.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP PAYMENTS ON YOUR MORTGAGE.

If you choose to use Tembo for mortgage advice, we may earn a commission from them for the introduction. This does not negatively impact the amount you'll pay for their service.

Tembo Money Limited (12631312) is a company registered in England and Wales with its registered office at 18 Crucifix Lane, London, SE1 3JW. Tembo is authorised and regulated by the Financial Conduct Authority under the registration number 952652.

Click here to see your activities