A new report by Simon Kucher and Partners has suggested that we are likely to see a surge in the number of people remortgaging in the near future.
The pricing specialist says that the housing market is about to undergo a major churn, with a rise in mortgage interest rates, combined with customers who remortgaged at the start of the recession coming to the end of their deals.
Between September 2007 and January 2009, 945,155 remortgage products were sold and only 545,741 new mortgages. As the majority of discount rates and ‘lock in’ periods only last for 2 or 3 years, there is likely to be a large number of customers returning to the market looking for a new deal. A lot of these will be people who remortgaged at the start of the credit crisis and therefore did not get the benefit of the current low interest rates.
Although a lot of analysts think interest rates will not rise until the latter half of 2011, Simon Kucher and Partners believes the rise will come during the first half of next year. The people who missed out on low interest rates at the start of the recession will therefore be looking for a new contractor mortgage sooner rather than later.
The report also suggests that mortgage lending companies should be introducing discounted pricing, value-added services and loyalty schemes for existing borrowers in order to retain customers and drive up sales.
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