Mortgage borrowers in Scotland are four times more likely to switch their loan to secure a better deal than in some other parts of the UK, new research has found.
It would seem that home owners in Scotland like to be well informed and will actively seek out the best mortgage for their circumstances, according to research from online broker Trussle.
In a survey carried out by YouGov some 41% of people in Scotland with a mortgage said they had switched provider to secure a more favourable deal at the end of a fixed period, followed by the East England with 39%, both considerably higher than the 28% average across the UK.
People in the West Midlands are most likely to be languishing on an expensive Standard Variable Rate (SVR), with just 11% having ever switched mortgage for a more attractive rate.
The report suggests that one explanation for this could be loyalty to one lender as people from the West Midlands were more likely than any other region to cite this as a reason for not switching, with 25% doing so. Just 14% of borrowers in Scotland said loyalty had prevented them remortgaging.
Other regions where a well below average number of home owners switched also include the East Midlands with 23%, the North West and the North East both with 25%, Yorkshire with 26% and the South East with 27%.
The research also reveals that in August 2016, the average annual savings gained from switching from an SVR to a market leading fixed rate rose to £3,500 as the Bank of England made its first adjustment to the base rate in over seven years, cutting it from 0.5% to 0.25%.
Indeed, this led to record low mortgage rates, yet according to the research, just a quarter of the population understand the relationship between a base rate change and their own mortgage.
The survey found that this lack of awareness is likely one of the reasons why those in the West Midlands are not switching, given only one in five or 19% of people from this region understand how their mortgage could be affected by the interest rate, compared to 28% across the UK.
Despite the potential savings from remortgaging dwarfing the £200 average saved by switching energy provider, people across all 11 regions were more likely to have switched gas or electricity provider to get a better deal, with half of the UK population having done so. This was most significant with West Midlands residents, who are almost five times more likely to switch gas or electricity provider than mortgage provider.
‘The majority of home owners across the country have never switched mortgage provider to secure a better deal, and that’s a worry. When you consider that only two in five people have remortgaged to reduce their repayments in Scotland, the most proactive region of mortgage switchers, you start to appreciate the scale of the challenge we face as a nation,’ said Ishaan Malhi, chief executive officer of Trussle.
‘December saw more home owners switch mortgage than any other month during the last eight years, thanks to historically low interest rates, but these people still represent a small fraction of those eligible to switch to a more suitable deal,’ he explained.
‘Much of the complexity and hassle has been eliminated from the switching process as lenders and brokers start to embrace technology. This makes it an ideal time for the remaining three million UK home owners paying their lender’s Standard Variable Rate to start thinking about switching to a more suitable mortgage deal,’ he added.
