When an introductory mortgage rate expires the majority of borrowers remortgage, but a minority end up paying reversion interest rates. Who are these borrowers and how much could they benefit from remortgaging?
In the UK, many mortgages have an initial incentive period with a discounted interest rate, after which the interest rate increases.
While in 2016 the FCA found evidence that a minority of borrowers did not remortgage when they would have benefitted from it, not much is known about the drivers of this inertia.
This research aims to provide insights on this topic. Using administrative data, we study switching behaviour in the UK mortgage market.
This research is part of the latest set of evidence the FCA is releasing on mortgage switching.
Adiya Belgibayeva, Teresa Bono, Philippe Bracke, João Cocco and Tommaso Majer
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