Mortgage Switch Guarantee could save borrowers £15bn
Trussle has outlined its proposals to get more borrowers off standard variable rates (SVRs) in a whitepaper designed to address wide-scale ‘switching inertia’ and the issue of mortgage prisoners – those unable to remortgage because they fail stricter affordability rules introduced in 2014.
Company founder and CEO Ishaan Malhi, said: “In the UK, there are three million homeowners on SVR. While the exceptional few actually benefit financially from being on an SVR, most will be paying a default level of interest which is often inexplicably high.
“If every one of these borrowers were transferred to a market-leading mortgage product, the annual saving to consumers would be in the region of £15bn, or more than £4,900 per head.”
Malhi said Trussle had identified five areas where improvements could be made. These are:
- The standardisation and simplification of pricing structures
- The standardisation of lender communications
- An obligation for lenders to offer new deals to mortgage prisoners
- Giving brokers access to all deals on the market
- The modernisation of slow and outdated processes
Trussle has also set out further steps to push for its Mortgage Switch Guarantee to become a reality. It will now consult with relevant parties across the industry and review recommendations for the guarantee based on feedback.
Once it has finalised the specific measures to be included, Trussle will seek support from regulatory bodies, including the Financial Conduct Authority and UK Finance. It will then present the Mortgage Switch Guarantee to the Department of Communities and Local Government and try to win its support so that the proposal can be put to Parliament.
Writing in the white paper, Paula Higgins, chief executive, Homeowners Alliance, said: “Mortgages are based on a long-term relationship between the lender and its customers and lenders should have a duty to treat their customers fairly throughout that period. Lenders shouldn’t take advantage of their customers by financially penalising loyalty. Instead, like other industries they should look to reward loyalty.”