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.
If you would like to comment on this story, contact:
Tel: 020 7484 9805
e-mail: [email protected]
£300bn of liabilities
View from the front row
Transfer from occupational scheme
Appointed by FCA and PSR boards