UK's Moving Mortgages
March 9 2005
Despite a housing market slowdown, the UK re-mortgage market remains buoyant and over 1m households are considering borrowing more, according to results from GfK Martin Hamblin. Mortgage switching is increasingly popular / fashionable and the agency says lenders now 'need to develop genuine retention strategies'.
Mortgage lending plummeted by 16% in January 2005 and house prices fell for the 8th consecutive month, but Britain remains a nation of mortgage switchers, keen to make the most of the best deals whether from new or existing providers. Some 15% of homeowners with a mortgage (2.6 million households) are planning to refinance in the next 6 months, of which:
- One million, representing more than £91.4bn in borrowing, said they were considering using a different provider.
- just under 860,000 households, representing £71.8bn, say they are likely to stick with the same vendor but want to look at changing the mortgage product they currently hold.
- A further 650,000 households haven't decided yet who their next mortgage supplier will be.
The total re-mortgage market up for grabs is estimated at £217bn.
GfKMH says the figures, higher than others reported recently due to being based on intentions rather than actual behaviour, highlight the strength of feeling and lack of loyalty amongst mortgage borrowers towards their lenders. Lenders have concentrated on tempting new mortgages to the exclusion of existing customers, and are now coming round to the realisation that they must look after both, according to the report. Monique Hellel, Director of the Financial Services Research Division at GfK Martin Hamblin, says that 'providers need to continually assess how to keep their customers loyal, and develop genuine retention strategies'.
Among other results, the survey also showed that over one million households are considering extending their mortgage, which equates to a market value of over £90bn: 34% of these aim thereby to make property improvements, whilst 18% want to release equity to fund a lifestyle and 16% plan to invest in another property. Only one in four households said they want to extend their mortgage in order to move into a more expensive home.
Mortgage intentions reflect generally buoyant UK consumer confidence in 2005, seen in the index figure for the agency's Consumer Confidence Barometer, which increased from -3 to +1 in January of 2005 and has levelled out to 0 in February.
The Mortgage Market Survey was carried out in the latter part of January 2005 amongst over 1,000 adults and is representative of the UK population. This was the third wave of research, the first study having been conducted in February 2004. GfKMH is online at
www.gfkmh.com
Notes: the above makes use of figures from the Council of Mortgage Lenders, Reuters: Hometrack Property Research Consultancy report and the Bank of England. All values have been calculated based on the average outstanding mortgage value.
All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.
