The Financial Conduct Authority says house buyers need more help to find the best priced and most appropriate mortgage deal for their circumstances.
The FCA also wants more assistance for long-standing borrowers who are currently unable to switch to a better deal - the group often referred to as ‘mortgage prisoners’.
The authority has just published the interim findings of a review into the issues and says:
- there is no easy way for a consumer to be confident, at an early stage, of the mortgage products for which they qualify “and this is a significant impediment to shopping around”;
- a significant minority of customers (around 30 per cent) fail to find the cheapest mortgage for them; and
- a number of long-standing customers would benefit from switching away from a reversion rate but cannot, despite being up-to-date with payments.
The FCA has additionally identified a range of potential ways to make the market work better for consumers. These include:
- making it easier for consumers, at an early stage, to identify for which mortgage products they qualify, to assess and compare those products and, ultimately, to take out a mortgage;
- removing barriers to innovation in the sale of mortgages;
- making it easier for consumers to assess the strengths of different mortgage brokers. The FCA intends to work with the broker sector to develop metrics to help consumers compare brokers;
- helping certain long-standing borrowers who cannot switch. The FCA intends to explore options to help these customers, for example an industry-wide agreement 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 payments.
The FCA says it will issue a final report with additional recommendations by the end of this year.