City regulator proposes changes to help borrowers

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Your home may be repossessed if you do not keep up repayments on your mortgage

The Financial Conduct Authority has said that buyers need more help to find cheaper mortgage deals, given that one in three people fail to find the cheapest deal, and these borrowers could save £550 a year.

The FCA is also looking at ways to help mortgage prisoners (those longstanding customers who are trapped in their existing deal) switch to a better deal.

It published an interim report into the mortgage market, and found that competition was working well for many people. However, it also identified ways in which the market could work better. As the UK anticipates a rate rise, it’s important for homeowners to get the best deal they can.

Mortgage debt accounts for over 80% of the UK’s household debt, so according to the FCA it’s really important that borrowers get it right.

Although the regulator said that there was little evidence that lenders were giving lenders the worst deal, there was no easy way for consumers to know what deals they could qualify for. There is a difficulty faced by borrowers in shopping around, with 30% of borrowers failing to find the cheapest deal and as a result paying £550 per year needlessly.

One suggestion by the FCA is that lenders make the relevant eligibility and other qualification criteria available to other market participants consistently at an earlier stage. This will not only help brokers but will also create other opportunities for new online tools. It also suggested that it’s made easier for people to compare mortgage brokers to find the best deal.

The FCA outlined how mortgage prisoners (many of whom took out an interest-only mortgage before the financial crisis) could be better helped, Because of stricter lending practices since the credit crunch, it has been much more difficult to find a cheaper mortgage. The FCA has suggested there could be an industry-wide agreement for all lenders to approve applications for a new mortgage deal from existing customers whose most recent mortgage was taken out before the financial crisis, and who are up to date with their payments.

The FCA is due to publish a report at the end of the year after consulting with lenders.

If you would like advice on how you could find the best mortgage deal for your circumstances, contact Derngate Wealth today.



April 12, 2018Danny PerryBlog

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