{"id":5025402,"date":"2019-08-16T12:06:33","date_gmt":"2019-08-16T11:06:33","guid":{"rendered":"https:\/\/www.buyassociation.co.uk\/?p=5025402"},"modified":"2019-08-16T12:06:33","modified_gmt":"2019-08-16T11:06:33","slug":"its-time-to-switch-mortgage-lenders-urged-to-inform-borrowers","status":"publish","type":"post","link":"https:\/\/www.buyassociationgroup.com\/en-hk\/2019\/08\/16\/its-time-to-switch-mortgage-lenders-urged-to-inform-borrowers\/","title":{"rendered":"It\u2019s time to switch; mortgage lenders urged to inform borrowers"},"content":{"rendered":"

Lenders are being encouraged to commit to \u2018mortgage switch\u2019 policies to help customers avoid moving onto more expensive standard variable rates at the end of their term. <\/strong><\/p>\n

Encouraging borrowers to remortgage or transfer to a different lender at the end of a fixed-rate period has been the focus of recent \u2018switch policy\u2019 campaigns independently supported by online brokers Habito and Trussle.<\/p>\n

Failing to switch at the end of a fixed-term costs British homeowners \u00a39bn every year according to Trussle\u2019s founder and chief executive, Ishaan Malhi. Currently, there are no guidelines for lenders to give customers any notice that their fixed term is coming to an end, or advise that they could save on their mortgage repayments by switching.<\/p>\n

Research by Habito<\/a> found that only one of the UK’s top six mortgage lenders have committed to giving customers three months’ notice, and only half said they \u2018tried\u2019 to notify customers before the end of their term, usually with a postal letter.<\/p>\n

Significant savings for borrowers<\/h4>\n

The standard variable rate<\/a> is the most common reversion rate offered by lenders when a fixed-rate mortgage product ends. In many cases, it can cost borrowers more than double what they were paying on their fixed rate. According to Ishaan Malhi, \u201cone in four mortgage holders are sitting on expensive and arbitrary SVRs, which is \u00a3375 per month per household or \u00a325m per day, on aggregate\u201d. Independent research by Habito has found that 55% of mortgage borrowers could save nearly \u00a3300 per month by switching.<\/p>\n

Plea for government support<\/h4>\n

Trussle has taken its plea for making the switching process fairer to parliament, calling for a \u2018Mortgage Switch Guarantee\u2019. The broker wants a law introduced that will force lenders to display the true cost of a mortgage – including the service costs and hidden fees – and to alert borrowers to this three months before their current term ends.<\/p>\n

Shadow economic secretary to the Treasury Jonathan Reynolds MP has backed the plea stating that the number of people defaulting to the SVR is a \u201cgenuine issue\u201d and has called on the financial sector to \u201cwork better to serve our people\u201d.<\/p>\n

Only last year Citizens Advice launched a super-complaint, prompted by the treatment of vulnerable consumers ending up on SVRs, with the Competition and Markets Authority, calling for the \u2018loyalty penalty\u2019 paid by mortgage borrowers<\/a> to be addressed.<\/p>\n

Habito calls for mandatory communications<\/h4>\n

Habito is calling for all lenders to adopt the four months\u2019 notice pledge to advise their borrowers when it\u2019s time to switch. Daniel Hegarty, founder and chief executive of Habito, said: \u201cWe\u2019re calling for mandatory communications notices from all mortgage lenders and banks starting at four months prior to the initial period ending, and across email and text.”<\/p>\n

The broker has committed to giving all customers four months\u2019 notice to switch their mortgage before the end of their existing fixed-rate deal.<\/p>\n

Brokers argue most lenders are already advising customers to switch<\/h4>\n

In response to Habito and Trussle\u2019s claims, many brokers argue that lenders are already doing this for their customers. David Hollingworth, associate director of communications at London and Country Mortgages, commented: \u201cLenders have become much more proactive in their retention strategies. It\u2019s likely that the lender is getting in touch and giving them some product options that they can switch to.<\/p>\n

\u201cFor brokers, it\u2019s a case of highlighting the fact that in many, many more instances now you can take into account the existing lender with a product transfer option.”<\/p><\/blockquote>\n

Hollingworth added: “And in most cases, brokers can put those into place for the customer. The customer is getting the cross-market viewpoint that they wouldn\u2019t get if just going straight to the lender.”<\/p>\n

Peter Brodnicki, co-founder and chief executive of Mortgage Advice Bureau, said: \u201cAnyone who doesn\u2019t do that already is an idiot – and you can quote me on that. Most lenders start a contact programme anywhere between six to three months out. I can\u2019t imagine getting to a point at three months where the lender hasn\u2019t been in contact.”<\/p>\n

According to Dominik Lipnick, director at Your Mortgage Decisions, lenders and brokers should be putting “more thought” into how options are communicated to customers. \u201cWhen a scheme is coming to the end, clients should consider not only what scheme to choose next but review the mortgage term as a whole, as well as associated protection policies.<\/p>\n

“My fear is that just giving clients more notice of a scheme coming to the end will not necessarily mean that a full review is provided.\u201d<\/p><\/blockquote>\n

While the onus is being put on lenders to commit to better servicing their customers, homeowners<\/a> would be well advised to take matters into their own hands. Proactively managing their mortgages and scheduling a mortgage review date in the diary three or even four months before the end of their mortgage term, should be part of every borrower’s future financial planning.<\/p>\n","protected":false},"excerpt":{"rendered":"

Lenders are being encouraged to commit to \u2018mortgage switch\u2019 policies to help customers avoid moving onto more expensive standard variable rates at the end of their term. Encouraging borrowers to remortgage or transfer to a different lender at the end of a fixed-rate period has been the focus of recent \u2018switch policy\u2019 campaigns independently supported… Read more »<\/a><\/p>\n","protected":false},"author":3380,"featured_media":10872,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[26,6],"tags":[25],"acf":[],"_links":{"self":[{"href":"https:\/\/www.buyassociationgroup.com\/en-hk\/wp-json\/wp\/v2\/posts\/5025402"}],"collection":[{"href":"https:\/\/www.buyassociationgroup.com\/en-hk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.buyassociationgroup.com\/en-hk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-hk\/wp-json\/wp\/v2\/users\/3380"}],"replies":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-hk\/wp-json\/wp\/v2\/comments?post=5025402"}],"version-history":[{"count":0,"href":"https:\/\/www.buyassociationgroup.com\/en-hk\/wp-json\/wp\/v2\/posts\/5025402\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-hk\/wp-json\/wp\/v2\/media\/10872"}],"wp:attachment":[{"href":"https:\/\/www.buyassociationgroup.com\/en-hk\/wp-json\/wp\/v2\/media?parent=5025402"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-hk\/wp-json\/wp\/v2\/categories?post=5025402"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-hk\/wp-json\/wp\/v2\/tags?post=5025402"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}