Credit crunch cuts switching by 17%

The credit crunch has hit home with a 17 per cent drop in the number of household and financial products being switched in the past year, according to MoneyExpert.com.

In the first quarter of 2008 a total of 32.2 million household bills for a range of basic services were moved to other providers compared with 38.9 million in the first quarter of 2007, the independent financial comparison website says.

MoneyExpert.com is blaming the 17 per cent slide on a combination of reduced mortgage transactions, increasing interest rates on credit products and tougher lending conditions being imposed by financial providers.

However the proportion of car and household insurance customers switching and the percentage of savers searching out new deals has not changed year-on-year. Around 14 per cent of motor insurance customers and 10 per cent of home insurance customers have switched providers in the past six months while five per cent of savers have moved to more attractive accounts.

MoneyExpert.com's authoritative Switching Index, which monitors the numbers moving provider on a quarterly basis, recorded year-on-year falls for all other product categories. The biggest fall was in the number of broadband users moving to new deals.

Around 54 per cent of adults have not switched any product in the past six months compared with 49 per cent in the same period last year.

Sean Gardner, founder of MoneyExpert.com, said: "Switching in search of a more competitive deal remains big business with 46 per cent of us moving at least one product to another provider.

"However the credit crunch is having an effect on people's ability to move as lenders increase rates and prices and withdraw products.

"The mortgage market has been the focus of concern this year as lenders have scrapped deals and made mortgage availability the big issue. With fewer deals on offer and stricter criteria it is no surprise that fewer people are moving.

"Other areas are feeling the chill of the credit crunch and general concerns about rising cost of living and inflation. Some people are staying put rather than seeking out the best possible deal.

"Doing nothing shouldn't be an option. There are still good deals out there and if finances are stretched savings should be sought if at all possible."

MoneyExpert.com says that regularly reviewing providers for a range of services is good practice but warns consumers that it might not always make financial sense to switch.