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The mortgage lending industry is highly competitive. Lenders compete aggressively with one another by devising ever more novel mortgage products which, when it comes down to it, are really a repackage of an existing product.

So, what does the industry do? They compete for your business on price – in other words their interest rate. And as long as lenders use price as the main weapon in their marketing campaigns, price led promotion will encourage re-mortgaging to chase cheaper offers.

Having created price led competition, the mortgage lenders look in horror at the obvious repercussions. They have adopted a somewhat insulting name for customers who switch lenders to chase lower interest rates – they call them “ Mortgage Rate Tarts”. We have a much more apt description – Smart Shoppers! After all, why should people be subject to implied criticism for simply ensuring they are consistently paying the lowest price? After all a pound from one mortgage provider as effective as a pound from another! (life insurance)

In an attempt to discourage switching, some lenders have raised their up-front charges whilst the more enlightened have improved their client retention programmes. In such a cut-throat market, accolades must be awarded for the best customer retention programmes but increasing front end charges will simply have the effect of diverting prospective customers to their competitors. The tactic would only work if all the mortgage companies got together to agree a common policy on up-front charges. But if that happened, their action would undoubtedly be referred to The Office of Fair Trading. So seems that some lenders still have to learn that carrots beat sticks! (life assurance)

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