A relatively new trend in the U.K. mortgage lending industry is that lenders are actively trying to retain their existing customers by offering them lower rates and attractive incentives. One popular move by lenders is to not lock home loan customers into fixed rate deals that force them into transitioning to the standard variable rate once the introductory period has ended. Lenders are offering more “under the counter” deals, giving the lender a best rate, or drastically cutting the original remortgage fee. These initiatives appear to be working as last year, more borrowers in the U.K. opted to stay with their existing lenders than ever before.
- House owners are often forced to remortgage when their mortgage loans expire because they know that it is rare to stay with one lender.
- Many banks and lenders are starting to understand the value of customer loyalty and they are now offering existing customers deals that lie under the counter.
- There has been a penalty for loyalty called the “loyalty penalty” as customers who are at the end of their mortgage are moved to variable rate deals.
“Lenders are finally more likely to try and entice existing borrowers to stay with them with an ‘under the counter’ deal, offering the best interest rate or slashing remortgage fees for existing customers, and setting up a product transfer rather than waving a good customer goodbye.”