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Loyalty ignored by lenders
1 April, 2008
Remortgagors are being charged £1,350 to renew their current deals as loyalty loses its value, moneysupermarket.com has claimed.
It appears that existing customers count for nothing in the eyes of today's lenders with the average borrower looking to renew their two-year fixed rate mortgage forking out £1,350.
However depending on the lender in question, this can range anywhere between £500 and £2,900.
Louise Cuming, head of mortgages at moneysupermarket.com, said: "It's disappointing to see lenders treating their existing customers this way. Loyalty should be rewarded, not punished. Instead these costs reflect pretty poor business practice.
"With mortgage applications on the decrease, lenders should be concentrating on retaining existing customers now more than ever."
According to Cuming, HSBC sets an example on the one hand by waiving its remortgage fees, however these customers are blocked from its best rate in favour of attracting new borrowers. This will end up costing them an extra £500 in interest on a typical two-year product.
She concluded: "Providers seem to be taking loyal people for granted and forgetting that existing customers cost so much less to win."