Figures for September show that borrowers switching to new deals accounted for just 30% of the market by value – the lowest figure since August 2001. More terrifying still, the figure is down from 42%, year on year.
This is not just a monthly blip. Over the third quarter of this year the trend has been apparent, with remortgaging accounting for only 31% of the market compared with 39% in the same period last year.
The CML claims the reason for this dramatic shift is lenders’ retention strategies – and that is a nightmare for brokers who make their money persuading borrowers to move their business from one lender to another.
From a consumer’s point of view it’s good to know that lenders are at last taking the trouble to find ways of satisfying customers over the longer term.
But it would be a mistake to assume they are keeping all these customers sweet simply by offering them long-term loans.
Although long-term fixed rates such as the new 10-year deal from Leeds are becoming more popular, they are not the reason for the lack of remortgaging activity.
CML statistics show that there has been a fall in the number of people taking out fixed rate deals.
Great customer service is always going to be a big draw for customers. Few of us will ditch a company that is looking after us well, even if a cheaper deal is dangled carrot-like in front of our noses.
On the other hand, we might think about moving our money and our custom from a bank that starts to treat us like fools.
First Direct’s current account customers have the highest customer satisfaction rating of any UK bank at 90%. Many of these customers have offset mortgages linked to their accounts.
But I would think twice about my banking provision if I was suddenly informed that I needed to keep 1,500 in my current account or pay a 10 monthly fee.
First Direct insists that most of its customers will not face the fee – including those who have another product with the firm such as a savings account or loan.
But I wouldn’t be surprised if some of its customers took umbrage at this heavy-handed tactic and thought twice about retaining First Direct’s services.