15 May 2018
The Financial Conduct Authority says that competition in the mortgage market is working well for many people, but around 30% of borrowers are still not finding the cheapest deal.
The UK financial regulator has just published its interim report into the mortgage market, in which it also says it wants to help 'mortgage prisoners' - tens of thousands of long-standing borrowers unable to switch elsewhere.
The FCA has identified a number of ways in which the market could work better for some homebuyers.
The regulator's proposals are particularly aimed at helping customers find the best-priced, suitable mortgage deal.
Christopher Woolard, director of strategy and competition at the FCA, said: “The mortgage market is one of the largest financial markets in the UK and there have been significant changes to the market since the financial crisis in order to ensure that we do not return to the poor practices of the past.
“For many, the market is working well with high levels of consumer engagement. However, we believe that things could work better with more innovative tools to help consumers.
"There are also a number of long-standing borrowers that have kept up-to-date with their mortgage repayments, but are unable to get a new mortgage deal; we want to explore ways that we, and the industry, can help them.”
Potential ways which have been highlighted to make the market work better for consumers include:
The regulator says there are a relatively small proportion of borrowers who took out a mortgage before the worldwide financial crisis, who are on a reversion rate and up-to-date with repayments, and would benefit from switching to a new deal but cannot.
The FCA has identified around 30,000 such 'mortgage prisoners' with authorised mortgage lenders. It also believe there may be customers up-to-date with repayments on a reversion rate in mortgage books owned by non-regulated firms – an estimated 120,000 may benefit from switching.
The regulator intends to publish a final report on the mortgage market around the end of the year.
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