Homeowners vote with their feet

Homeowners who are unhappy with their mortgage deal are voting with their feet, with as many as 1.39 million people having dumped their mortgage provider in favour of a better deal in the past six months, according to research by MoneyExpert.com.

The independent financial comparison website says around three per cent of the adult population has switched mortgage provider since June last year but claims that this represents around 11 per cent of all mortgage holders.

The research comes amid increasing uncertainty about mortgages. The Bank of England recently expressed concerns that an increasing number of households will be unable to secure credit because of the introduction of stricter lending criteria. It is expected that the Bank will tomorrow (Thursday 7th) lower the base rate by 0.25 per cent to 5.25 per cent in response.

And according to MoneyExpert.com homeowners are prepared to switch mortgages despite increasing application fees and the threat of early redemption penalties. The comparison website recently reported that in the past 12 months the number of mortgages with uncapped upfront fees has grown almost fivefold.

Sean Gardner, Chief Executive of MoneyExpert.com, said: “The uncertain financial climate of the past six months has forced many people to reassess their household budget with the mortgage top of the list of priorities.

“Plenty of people will have dumped a mortgage provider because they want to fix their rate while others will have been on the lookout for a new deal after coming off a competitive fixed rate from times when rates were very low.

“But whatever the reason if you swap mortgage provider the process is unlikely to be cheap. Application fees are rising and most are now uncapped, meaning you’re likely to pay a proportion of the total amount you borrow. That means switching mortgage could cost you thousands of pounds.”

According to MoneyExpert.com there are over 2,300 different fixed and variable mortgage deals on the market catering for everyone from graduates to sub-prime borrowers and self employed people.

People aged 35 to 44 are the most likely to have switched mortgage provider, while people living in the South of England are least likely to have done so.