Lenders are making it less cost-effective to remortgage

From Chris Poole

I agree with Sue Read’s comment (Mortgage Strategy September 26) regarding lenders trying to retain existing customers, but would like to point out that the number of lenders offering more attractive rates to existing customers is minimal. The ‘can I borrow your pencil’ syndrome is still the norm.

The reason it is becoming less economic to remortgage clients to a more attractive rate is that lenders have increased their final repayment and deed release fees out of all proportion. Abbey has increased its fee from 95 to 225, Nationwide from nothing to 95 and The Woolwich from 95 to 195, to name but a few.

Couple this with the trend among lenders charging towards higher and higher arrangement fees and the viability of remortgaging clients, particularly for smaller borrowings, cannot be justified.

This, of course, is no coincidence and is an underhand way of retaining customers without having to offer the competitive rates needed to attract new business.

Read is correct when she says brokers still have to put in work to ascertain whether or not it is right to remortgage a client, but there could be light at the end of the tunnel. The Woolwich recently introduced a retention service which, although does not offer customers a choice of its better rates, does pay brokers a fee if we recommend the client stays with it. With luck, other lenders may follow suit.