Traditionally, when someone takes out a new homeowner loan or mortgage, they look at the short term cost of the loan, over two or three years for example, whilst the initial incentive remains on the product, whether that is a fixed rate, discount or tracker rate.

Once the initial period has finished, most borrowers will re mortgage their home to get another cheap loan deal from a new lender for another two or three years…and so it continues throughout the term of the homeowner loan.

Although this may not be the most cost effective method of buying a house over the long term, by the time the borrower has paid for legal fees and valuation and arrangement fees on the new loan, many people feel as though they are getting a good deal and so the process will carry on.

But things now seem to be changing on the homeowner loan market. As lenders are withdrawing any competitive cheap loan deals from their books and interest rates on borrowers existing homeowner loans have fallen significantly, many people are choosing to remain on their existing lenders standard variable rate of interest once their initial deal has ended, rather than looking for a re mortgage product, as in many cases this is much cheaper than any of the new loan products on offer from other lenders.

If a borrower only has a low level of equity in their home, the case is even stronger for staying with their original lender, as most of the competitive loan products on the market at the moment will only lend up to 65, or 75 per cent loan to value.

Until banks and building societies start to offer more competitive homeowner loan deals, we are likely to see the re mortgage market in the UK stagnate, as there is no incentive for a borrower to switch to a product which will work out more expensive for them.