Three in ten homeowners would rather pay more interest than risk being rejected by another mortgage lender, according to research from Cheltenham & Gloucester.
The research also found 15% did not know what criteria lenders use to decide if a potential borrower is eligible for a mortgage.
C&G surveyed homeowners due to remortgage within the next year, and found many will not shop around for deals for fear of being rejected.
Overall, 37% said they would not approach a lender because of worries they would be turned down. Also, 30% of remortgagers say they will knowingly pay a higher standard variable rate (SVR) because they do not want to be refused by another lender.
A perceived scarcity of good deals was a major factor deterring people from securing a new deal, while 27% wanted to hold out for further interest rate cuts in the future.
Stephen Noakes, marketing director at C&G, says: “In a climate of low confidence, homeowners are less willing to shop around for a new mortgage. Fear of their application being rejected, the belief they will have no choice of deals and a lack of understanding of how lenders look at eligibility are all contributing to this reluctance.”
Some respondents, around 15%, said they did not understand how lenders assess who is eligible for a mortgage, and Noakes believes this is contributing to homeowners’ reluctance to seek out better deals.
C&G is urging borrowers who are due to remortgage to seek advice and shop around, as they may end up paying more than is necessary.
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