Remortgaging - to switch or not to switch?

Mortgages are devilishly complex to set up, and for most of us, once we've got the mortgage all sorted, we're quite happy to leave it that way. However, there's a new breed of borrower, called (not very affectionately) 'rate tarts' by the mortgage lenders, that look around for better deals and switch mortgages when they please. They're making the most of a very competitive market, in which mortgage lenders are offering lower and lower interest rates to get borrowers through the door. It makes sense to switch mortgages if there is money, possibly a very significant amount, to be saved. To combat this growing trend, some mortgage lenders have decided to up the ante, accompanying extremely low interest rates with ridiculously high set up fees. This is a double-edged sword because although it increases their profit margins, it reduces the lender's market share. Here's a good example of this practice: Birmingham Midshires. They have a 3.89% two year fixed deal on the market at the moment. But yes, it is too good to be true. A closer look at the small print and the arrangement fee is quoted at