FCA publishes new research on mortgage switching

UK households that have switched mortgage provider have an average income of around £50,900 if they switched internally, and £58,700 if they switched externally, according to new research papers published by the FCA.

The research also suggested that that non-switchers were less likely than those who switched to have used a mortgage broker to find their initial deal, and that all consumers could become better engaged with the switching process if given the right information at the right time.

The FCA’s Mortgages Market Study, published in March 2019, had identified that some consumers were choosing not to switch to cheaper deals, despite being eligible to do so. This found that up to 800,000 consumers were missing out on an average of £1,000 a year by not changing deals.

The FCA indicated it thought there was a case for intervening to help mortgage customers who do not switch, and that it would issue a consultation paper on potential remedies later this year.

The regulator’s research showed the factors contributing to the decision not to switch included a lack of time, a fear of the application process, and for many, relative contentment with their current lender or deal. The FCA added that it had found for consumers that do not switch, as was the case for most mortgage borrowers in its research papers, they were less likely to be vulnerable compared to the general population.

The research, which includes the findings of interviews conducted by Savanta ComRes, found that for consumers not switching, the majority lived in areas that were neither particularly deprived nor particularly affluent, were more likely than those who switched to be older – their average age was 36 years old and 90% of them were 50 or younger – and were also more likely than those who switched to have a mortgage in the name of a single borrower.

The FCA suggested it had considered a range of different remedies and that it intended to consult on its proposed response in the second quarter of 2020.

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