Two thirds (68%) of new mortgages approved in 2017 were with the Big Six lenders, amounting to just over 1 million in total, according to research from online mortgage broker, Trussle.
If each of these 1 million customers were to choose a two-year fixed deal based on how low its rate was, rather than its true cost over the introductory period, they would collectively lose out on £405m.
The firm believes that borrowers looking to take out a mortgage with the UK’s Big Six could save themselves up to £390 by ignoring the banks’ lowest rate, and choosing a higher rate product with less additional charges. Trussle’s study of 2,000 UK mortgage borrowers found that “not even half (44%) considered upfront costs when choosing their deal”.
Both lenders and comparison sites advertise mortgage deals in a way that encourages borrowers to prioritise low headline interest rates, but Trussle’s research suggests that “the benefit of eye-catching low-rate deals is often wiped out by high upfront costs”.
Trussle CEO and founder, Ishaan Malhi, said: “The Big Six lend to more than two thirds of UK mortgage borrowers, and have a huge amount of influence on people’s dreams of owning a home. They should be the ones leading the charge for transparent mortgage pricing, instead of the unfair promotion of low rate products that come with high fees.
“If the big lenders can make this information clearly available to borrowers, homeowners will finally be able to secure a mortgage, confident they’ve made the right decision.”
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