UK homeowners need help to find cheap mortgage deals, according to FCA
With getting onto the property ladder harder than ever and one in three buyers failing to secure the best deal, the City regulator has proposed plans to help people shop around more efficiently. Although there are plenty of comparison sites out there, it’s still not always easy for consumers to make a reliable choice that will really work for them long term.
For many, it seems that there is too much choice available and people still don’t really understand what each individual lender can offer them.
According to the FCA, the average mortgage buyer could have saved in the region of £550 a year by researching lower priced deals. The organisation is also keen to help so called “mortgage prisoners” – those who are stuck paying high rates every month – find a more affordable alternative.
The FCA continued to say that although many people have benefited from comparison sites, more work could be done to improve the market.
“Mortgages currently account for over 80% of UK debt, so choosing the right one is a big and important decision” says Wimbledon estate agent, Robert Holmes. Yet with so much conflicting information out there and a huge number of lenders to choose from, it making that decision can seem like an overwhelming task. About 30% of consumers fail to find the best mortgage option the first time around.
The FCA’s suggestions for simplifying the process includes lenders being more transparent with brokers about their selection criteria. This will make it easier for people to find deals they will be eligible for and make informed comparisons. Knightsbridge estate agent, Plaza Estates said, “There are calls for more innovative tools to help consumers choose a deal without being disappointed further along the line.”
Other suggestions include helping long standing borrowers find better deals to switch to, particularly those who were tied into interest-only deals before the financial crisis took hold. The age of austerity has led to more stringent lending criteria, meaning thousands of homeowners are now trapped in mortgages that are no longer meeting their needs.
The FCA has suggested new industry-wide agreements for lenders approving new mortgage deals from existing customers who took out loans prior to the financial crisis and have a good repayment history. Reigate estate agent, Robert Leech said, “These new plans will come as welcome news to anyone who’s feeling imprisoned by their mortgage or struggling to find the best deal to suit their needs.”
A further report will be released by the FCA at the end of the year, but in the meantime, it looks as though we are heading in the right direction, both for current homeowners and those who are looking to take their first steps on the property ladder.