Remortgaging drops sharply

26/10/2009

Low interest rates have seen a further decline in remortgaging - even as mortgages for home purchase approvals increase.

Latest figures from the British Bankers' Association (BBA) found that new homebuyer loans hit 42,088 over September, up 77 per cent from September 2008.

However, remortgaging loans registered a 60 per cent year-on-year drop, reaching just 21,282 over the month.

Mortgage firms have reduced their standard variable rates (SVR) recently, in line with the record low Bank of England rate.

This lessens the attractiveness of fixed-rate mortgages, with many mortgage customers merely switching to their lender's SVR when their deal runs out.

Kevin Still, EuroDebt director, also believes that this decline is due to public skepticism about their banks.

"Despite the fact that the banks now have access to more funds and there is more new business underwriting, there is clear evidence that many homeowners are either unable to re-mortgage or are reluctant to do so," he commented.

"EuroDebt's experience is that consumer confidence remains very low and that homeowner attitudes towards their bank remains very frosty, based upon their personal experiences when times get tough. 'Treating customers fairly' (TCF) has a long way to go before longstanding clients believe that banks don’t always put their own interests first. What is most evident is that clients are now dealing with far more junior members of staff and very few have had any form of meaningful relationship with the client or have any authority whatsoever, even if you can speak to somebody actually based in the UK.

Mr Still added: "Loyalty does not seem to be rewarded any longer either in your banking, insurance or energy provider relationships. EuroDebt has taken a pro-active stance on this by launching 2 consumer focused websites at www.bankswitching.co.uk and www.energyswitching.co.uk. These are particularly relevant for those people or families struggling with their finances and needing debt help."

Tags; Housing Debt and Bills, Young Family Finances,

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