Half of homeowners have remortgaged

Nearly 50% of borrowers have switched to a new mortgage lender at some point, according to research published today.

Almost half (48%) of the homeowners questioned by lender Abbey said they had remortgaged at some point, and 40% of respondents had done so in the last five years. Of all those surveyed, 11% had remortgaged twice in the past five years.


Overall, homeowners in Yorkshire were most likely to have switched lender, with 59% saying they had remortgaged at some point. Those in Scotland were least likely to have moved to a new lender, with just 42% saying they had switched.


Scottish homeowners were most likely to be paying their lender's standard variable rate (SVR) - 42% said they were on an SVR deal compared with 36% across Britain as a whole.


The prime reason to remortgage was to move to a lower interest rate and reduce monthly payments, with 66% of those questioned citing this as their reason to switch.


However, almost one in five respondents (19%) said they had taken out a new home loan to release money from their property. For 36% the extra money borrowed against the property was to be used for home improvements, for 16% it was going to pay off other debts and for 5% it was to be used in the purchase of another property.


Not all those asked were interested in switching to a new mortgage provider. Of the 52% who said they had never remortgaged, 19% said this was because they were happy with their lender and 10% said they had a good mortgage rate at the moment. Redemption penalties were tying 9% into their current deal, while 3% thought the whole process would be too expensive.


Gary Hockey-Morley, Abbey's director of mortgages, said: "More and more people are now remortgaging to help them change their lifestyle or career and to own their own home quicker, not just to reduce their monthly repayments.


"Some people still feel that it's too expensive to remortgage although actually it needn't cost a penny."


Elliot Nathan, operations manager at mortgage broker John Charcol, said there was a "misconception among borrowers that remortgaging is a very expensive and lengthy process".


He said: "The remortgage market is very important to the mortgage market. Lenders are obviously very aware of this, and I can guarantee that you will find a lender offering a good interest rate who will offer to pay for your valuation or refund the fee, or pay your legal fees or offer some form of cashback."


Figures released by the Council of Mortgage Lenders last month showed that in April lending to remortgaging customers had outstripped that for house purchases for the fourth consecutive month. Remortgage lending accounted for 44% of loans - down from January's figure of 50% but more than April 2004's figure of 37%.