The City regulator has proposed plans to make it simpler for borrowers to find the best mortgage deal possible. This comes after it was found that one in three people fail to find the cheapest deal. According to the Financial Conduct Authority (FCA), these people could have saved £550 per year had they known of a lower-priced deal. The incentive also helps to benefit mortgage prisoners.

New Information

The FCA published an interim report into the mortgage market. The report found that competition was working well for many people. Nevertheless, there were also ways that the market could improve. Mortgage debt accounts for over 80% of total UK household liabilities, therefore it is clear that selecting the best deal is one of the most crucial financial decisions a person can make. There is little evidence that present arrangements between firms were leading to poor consumer outcomes.

Borrowers Need Help

The FCA has suggested that lenders make the necessary eligibility and other qualification criteria available to other market participants at an early stage. Another proposal involves making it easier for people to compare mortgage brokers. The FCA intends to work with the broker sector to develop ways of comparing deals.

On average, a borrower’s choice of intermediary impacts the eventual cost of their mortgage. Furthermore, there is a link between more expensive mortgages and intermediaries that typically place business with fewer lenders. However, there aren’t enough tools available to help consumers choose and intermediary.

For many existing borrowers, they have kept up to date with their mortgage payments but are still unable to get a good remortgage deal. The FCA wants to explore ways in which the mortgage industry can help new and long-standing borrowers.

In regard to mortgage prisoners, the regulator suggested that there could be an industry-wide agreement for lenders to approve applications for a new mortgage deal whose most recent mortgage was taken out prior to the financial crisis and have not defaulted.

The FCA has yet to consult on the findings and proposed solutions. A final report is due around the end of the year.