£3bn Mortgage Savings Up For Grabs As Remortgage Market Kicks Off
Consumers could save a staggering £3.47bn a year in interest payments on their mortgages by moving to more competitive deals, according to research by Intelligent Finance.
Consumer 'losses' rack up as mortgage debt rises.
With outstanding mortgage debt up from £611.6bn to £697bn - 13.9% - in the year from April 2002 to April 2003, the amount consumers overpay in mortgage interest from taking out or remaining stuck with relatively uncompetitive deals continues to rise.
Half UK Mortgages remain on variable rate.
Over half of UK mortgages, some 56%, are still variable rate mortgages.
With the average standard variable rate at 5.64%, consumers could save a staggering £3bn a year by simply moving their mortgage to a more competitive deal.
Commenting Grenville Turner, Chief Executive, Intelligent Finance said: "The pace in growth of consumers' mortgage debt means that consumers are continuing to lose huge sums by failing to switch to more competitive deals. Choosing a mortgage is the single, most important, financial decision most of us make and people need to continually revisit their mortgage to ensure it remains competitive."
Figures from the Council of Mortgage Lenders show that re-mortgage volumes are traditionally much stronger in the second half of the year, peaking in October and November. With the average transaction taking around three months to complete, many people will be turning their minds to their mortgages in the next few weeks.
Remortgaging still only accounts for 12% of mortgage debt
Re-mortgage volumes have risen by 145% in the last two years alone, rising from some £34bn in 1999 to over £83bn last year. The strong growth in outstanding mortgage debt over the same period has, however, ensured that re-mortgaging still only accounts for a small proportion of the UK's total outstanding mortgage debt. It amounted to just over 12% last year.
Consumers are as a result still only realising a fraction of the savings they could make by more actively managing their mortgages. "Innovative deals like offset banking can make consumers' money work harder for them over the short and longer-term, reducing the term of their mortgage and could potentially save them thousands of pounds in interest payments," Grenville Turner, Chief Executive.
Complaints about financial services hit record levelsComplaints about financial products and services leapt by 44% last year, underlining growing levels of dissatisfaction with pensions, endowments and stock market investments, it was revealed yesterday.
Mortgage endowments attracted the largest number of complaints and the financial ombudsman criticised some insurers for "seriously under-estimating" the number of customers complaining about such products.
A record 62,170 complaints were received by the financial ombudsman service in the year to March 31 - double the 31,000 received two years earlier. In total the service received more than 462,000 enquiries.
The youngest person to bring a complaint last year was a 16-year-old who had locked horns with his bank over his cashpoint card. The oldest was a 102-year-old from Scotland complaining about money he had lost on his split cap investment.
More than a fifth of new complaints involved mortgage endowments. Earlier this year the service saw the number of cases involving such policies rise to 800 a week as thousands of investors received letters warning them their endowments were unlikely to produce the cash they needed. Deep cuts to bonuses and final payouts have exacerbated the situation, leaving many homeowners facing shortfalls on their mortgages.
Walter Merricks, the chief ombudsman, said some firms had been caught out by the surge in people complaining, "leading to major backlogs and delays".
During the year the service received more than 2,200 complaints relating to split capital investment trusts. Up to 50,000 people may have lost money in these supposedly "low risk" funds.
Personal pensions also accounted for a sizeable chunk of the postbag. While the main pensions mis-selling review is now largely over, the main issue complained about continues to involve advice given to policyholders to leave, or not to join, a company pension scheme and take out a personal pension instead.
The ombudsman service settles unresolved disputes about a range of financial products from pension plans and mortgages to travel insurance and savings accounts.
Mr Merricks said this year's increase in complaints reflected rising
expectations on the part of the public - expectations fuelled by firms'
promises of better-value products and more customer-focused service.