Homeowners paying ‘ultimate loyalty penalty’ of £4.5k per year; £9bn collectively

Homeowners who lapse onto their lender’s Standard Variable Rate (SVR) mortgage are facing the ‘ultimate loyalty penalty’ of £4,500 per year on average, according to research from online mortgage broker, Trussle, or collectively are missing out on £9bn worth of savings.

Latest figures show that the loyalty penalty associated with mortgages works out to be 540% more than other bills combined.

Previous research from Trussle has suggested that poor communication is causing many borrowers to lapse onto their lender’s SVR. One in five said they couldn’t remember the last time their provider contacted them about their mortgages. Almost twice as many say their lender or broker doesn’t do enough to keep them updated.

There is evidence to suggest homeowners are beginning to open their eyes to the impact of falling onto an SVR, however. UK Finance data showed that a significant 16% year-on-year increase in the number of people switching deals with their existing provider. A total 292,500 people carried out a mortgage product transfer in the second quarter of 2019.

With mortgages being the largest source of household debt in the UK, and homeowners collectively wasting more than any other industry from failing to switch from expensive SVRs, Trussle is calling for lenders to sign up to the Mortgage Switch Guarantee to make mortgages fairer, more transparent and more accessible.

“Consumers are essentially being penalised for staying loyal to their providers and collectively overpaying billions of pounds across the mortgage, utility, product and service sectors,” Trussle founder and CEO Ishaan Malhi commented.

“Mortgages are clearly the worst offender.”

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