Although it helps them find the property of their dreams, homeowners are saying that it is now too easy to borrow more money than people can sensibly afford.
Research by Sesame reveals that 74% of homeowners thought it was too easy to borrow money that they could not really afford. Only 8% of people thought they could not borrow enough money from lenders.
Conversely, GMAC-RFC’s responsible lending study found that 98% of homeowners did not think they had overstretched themselves to purchase their current home. Concerns about over-reaching themselves were highest in the north of England; here 80% of homeowners thought high amounts were too easy to come by. The conflicting figures suggest that although high amounts are available to borrowers, they are mostly holding back from the brink and taking the sensible option within their limits.
Borrowers are evidently frustrated at the lack of effort mortgage lenders go to to retain their business. Some 62% of borrowers in the survey said that lenders put all their efforts into penalising borrowers who want to move to a better deal, whereas only 9% said the opposite.
Annoyance at lenders’ discouragement was felt most strongly in Wales and the south west where 69% felt they were actively prevented from switching. Only 39% of those asked would seek help from an IFA when looking for anew mortgage deal. Some 35% got their deal direct from a bank or building society, and another 24% took advice from a mortgage adviser. Interestingly in the 18 to 24 age group 42% said they would buy a home without any professional financial advice.
It would appear that mortgage lenders will do all they can to get new customers, by allowing them to borrow way more than they can sensibly afford if they want to. Many customers are happy to do this without taking advice. When it comes to retaining customers, however, lenders are not so keen to help them. They do, after all, make money if they leave too.
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