What is driving the rise in lender switches?
A growing number of borrowers are opting to remortgage with a new lender rather than stay with their current provider as competition in the mortgage market intensifies.
For years, product transfers have dominated refinancing, but mortgage network PRIMIS reports a shift, with remortgaging activity expected to rise sharply this year.
A recent poll by PRIMIS found that two in five advisers have already observed a “noticeable increase” in clients switching lenders. Additionally, 93% of respondents anticipate higher remortgage volumes over the next year.
Craig Hall (pictured), director of strategic partnerships at PRIMIS, pointed to the Bank of England’s recent rate cut as a key driver of this trend.
“We’ve just seen the Bank of England slash the base rate from 4.75% to 4.5% at its first monetary policy committee meeting of the year,” he said. “That’s driving a real bump in competition, with most lenders rushing to cut their own rates off the back of it.
“Switching to a new lender could be a better solution than sticking with their existing lender.”
UK Finance data from Q2 2023 showed that 84% of remortgaging borrowers remained with their current lender rather than moving elsewhere. However, PRIMIS’ research suggests that trend is shifting, particularly for those coming to the end of shorter fixed rate deals.
Among brokers surveyed, 38% said they were seeing more clients on two-year fixed rates now opting to switch lenders, having adjusted to higher repayments. Meanwhile, borrowers exiting five-year fixed deals continue to face substantial increases in monthly costs.
Hall noted that while product transfers offer a streamlined process without a full re-underwrite, they often come with limitations.
“For many borrowers facing a big step up in repayments, that could mean extending their term to absorb those higher costs,” he said. “This highlights the reason for customers to seek independent advice to review both their mortgage and protection needs remain adequate and is another reason remortgage volumes are going to stage a real recovery over the coming months.”
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