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Third of homeowners will pay more out of fear

One in three remortgagers believe they have no option but to stick with current lender for fear of being turned down for a new mortgage.

According to new research from Cheltenham & Gloucester, many people who need to remortgage are willing to risk a less competitive rate with their current lender instead of risk another mortgage lender saying no.

C&G surveyed homeowners due to remortgage within the next year and found one in three said they will not even approach other lenders for fear of being rejected. Of this figure, 40 per cent believe they have no option but to convert onto their lender’s SVR.

And 30 per cent of all remortgagers said they would prefer to knowingly pay a higher rate with their current lender than face being turned down by other lenders.

Fifteen per cent of borrowers don’t understand how lenders decide whether someone is eligible for a new mortgage. In the face of this, over one third of remortgagers will spend less than half a day shopping around for a new deal.

C&G marketing director Stephen Noakes says: “In a climate of low confidence, homeowners are less willing to shop around for a new mortgage. Fear of their application being rejected, the belief they will have no choice of deals and a lack of understanding of how lenders look at eligibility are all contributing to this reluctance.

“Industry figures show that there are around 5,000 different mortgages available and the average remortgager owns over half of the equity in their property. So for the majority of people, there is still plenty of choice.”

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