Mform.co.uk has warned that lenders are increasingly using customer profiling to decide what deals to offer to existing borrowers as part of managing so-called “churn”.
Systems such as Intelligent Churn Management sorts borrowers into categories based on how likely they are to switch and how likely they are to get into trouble with their current loan.
They then use the customer profile to decide how to deal with customers coming to the end of deals – and those who are seen as less likely or able to switch are offered the worst deals.
Mform.co.uk says that the most at risk are younger borrowers with less well-paid jobs who may only be offered standard variable rate deals – typically around 7.25 per cent – while older and wealthier customers will be offered most competitive deals.
Marketing and business development director Francis Ghiloni adds: “It makes some sense for lenders to use profiling tools to manage their mortgage books. It is estimated to cost around 0.5 per cent more to sign up a new customer compared to keeping an existing one.
“However it makes no sense for borrowers simply to accept what is offered by lenders. If their computers classify you as only fit for a standard variable rate then you ought to move. The credit crunch has made mortgage availability the major issue and lenders are increasingly taking a tough line with existing borrowers. However they can still remortgage elsewhere and should.”