Online mortgage broker Trussle is calling for a ‘Mortgage Switch Guarantee’ to make switching fairer for homeowners, after discussing the growing need for transparency and accessibility to mortgage switching with MPs.
At a sponsored reception with Trussle at Parliament last night, Shadow City Minister Jonathan Reynolds described the number of people falling on standard variable rates as a “genuine issue” and called on the financial sector to “work better to serve our people”.
With mortgages being the largest source of household debt in the UK, and homeowners collectively wasting £9bn a year due to complexity associated with mortgage switching, Trussle is calling for a Mortgage Switch Guarantee. This guarantee will force lenders to display the true cost of a mortgage, allow borrowers to access key information digitally and contact borrowers three months before the end of their initial term.
The panel at last night’s reception featured Trussle, the Shadow City Minister, Atom Bank and Citizens Advice Bureau – all of whom stressed the importance of needing great transparency in the mortgage market.
Speaking to the panel, Trussle founder and CEO Ishaan Malhi said: “Mortgages are one of the biggest and longest-serving injustices facing consumers today. One in four mortgage holders are sitting on an expensive and arbitrary Standard Variable Rate, which is £375/month per household - or £25m per day, on aggregate.
“This costs British homeowners £9bn every single year, not to mention the stress, anxiety and missed opportunities that coexist with unfair treatment. It’s crucial to put pressure on providers to make mortgage switching fairer.”
Malhi called on the Financial Conduct Authority (FCA) to take inspiration from Ofgem and Ofcom, who have acted to curb loyalty penalties in the energy and mobile phone markets, where government-backed standards now save consumers an average of £320 and £220 per year respectively when switching providers.
Trussle calculated that, in the mortgage market, switching providers could yield between 15 and 20 times the amount saved from the energy or mobile phone markets in annual savings.
Atom Bank director of lending Maria Harris urged the end of the term Standard Variable Rate warning that “there is nothing standard about falling onto a lender’s default rate.” She called for more transparency over mortgage deals from lenders, saying “as we move into Open Banking, it should be simple for banks to do this.”
Meanwhile, Citizens Advice Bureau senior policy researcher Morgan Wild added that the UK needs “better, smarter regulation” to prevent homeowners from falling onto standard variable rates and mentioned the urgency of the super complaint.
Malhi concluded the speeches by encouraging the audience to support and campaign for the Mortgage Switch Guarantee “to put billions of pounds back into the pockets of the consumer.”
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