Mortgages

Non-switchers less likely to have used a mortgage broker: FCA

Only 1 in 5 recalled being contacted about switching or renewing their mortgage deal.

Rozi Jones
|
10th March 2020
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"It is important for the FCA to call upon such brokers and understand just how technology can be used to work to the benefit of consumers."

Consumers who used a broker to help select their initial mortgage are more likely to remortgage than those who purchased directly from the lender, according to new FCA research.

Factors contributing to a decision not to switch include a lack of time, a fear of the application process and, for many, relative contentment with their current lender or deal.

The research also suggests that consumers could become better engaged with the switching process if given the right information at the right time.

The survey found that while many of 'non-switchers' were aware of the process, around 40% had never considered switching with their current lender. Additionally, only 1 in 5 recalled being contacted about switching or renewing their mortgage deal.

It is therefore not surprising that those who don't switch products are less likely to have used a mortgage broker to find their initial deal.

On average, these consumers say that a monthly saving of £120 would encourage them to switch mortgage.

Paul McGerrigan, CEO of Loan.co.uk, said: “The FCA’s report is encouraging. Most consumers with mortgages are clearly switched-on when it comes to their finances. What is alarming, however, is a significant number of consumers could be missing out on a product that is better tailored to their circumstances because they want to avoid the hassle of switching providers. Even when introductory rates end and consumers face a higher reversion rate, many accept higher payments rather than investigating a better deal.

“The challenge lies in finding a mortgage that works for them. With the vast number of products on the market, consumers feel overwhelmed when it comes to selecting a mortgage. With such confusion, how can we expect consumers to feel motivated to switch?

“Thankfully, credit brokers are beginning to overcome this challenge by creatively embracing sophisticated technology solutions and providing a one-stop-shop app or web-platforms for consumers to switch mortgage providers. Here, they are able to consult a broker, view their various options, and apply for a mortgage all in one place. Such brokers are empowering the consumer.

“That’s why it I believe it is important for the FCA to call upon such brokers and understand just how technology can be used to work to the benefit of consumers.”

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