Intermediaries are failing to capitalise on the potential of the remortgaging market as 75% of borrowers are still with their original provider.
According to intermediary Charcol, borrowers could be saving £8.4bn, based on the £663bn outstanding on UK mortgages, as detailed by the Bank of England figures for November 2002.
Ray Boulger, senior technical manager of Charcol, said: ‘Remortgaging should be an integral part of people’s financial planning and they should review their mortgage every year ‘ regardless of any redemption penalties attached to the existing deal.’
However, the findings have created surprise in the market. Kevin Patterson, managing director of Park Row Independent Mortgages, said: ‘I am staggered by that. Comment in the past has pointed to 50%-60% being stuck on the same deal.’
He said with last year’s record amount of remortgaging business, he would have expected the figure to have dropped.
To capitalise on the latent potential the market has, Charcol is offering borrowers free reviews of their existing mortgage arrangements, having recently published a remortgaging guide.
The research also pointed to the market being driven by those looking to save money and not extend their debt by releasing equity. Half of those asked would want to reduce payments if they were to remortgage, while only a quarter would look to consolidate existing debt or undertake home improvements by increasing their mortgage.
Charcol’s research was carried out by research specialist, Market Minder, with 1,960 borrowers questioned.