You are here: Home - Mortgages - First Time Buyer - News -

Seven-day mortgage switching on horizon

Written by:
Homeowners could be offered the chance to switch mortgage provider in seven-working days from next year, under wider plans to boost consumer rights being considered by the government.

In the most ambitious proposals announced in the Queen’s Speech last week, ministers are keen to extend seven-day current account switching to most services including mobile unlocking, which should save consumers £48m a year in charges.

Business secretary Sajid Javid acknowledged that many consumers fear that changing some services is too cumbersome and difficult. But, mortgage providers will be asked to offer the same standard of service that banks must offer those who change their current accounts.

Instead of the four to eight weeks it usually takes to change mortgages, like current account holders, customers could be guaranteed that all changes complete within seven working days, with the bank liable for any errors.

Plunging mortgage rates have encouraged more borrowers to switch lender. The latest Bank of England figures show that rates in March fell to the lowest level since records began in 2004.

Javid told The Times that fixed-rate mortgages come with early repayment penalties, making a seven-day switch more complicated, but added that he wants the service to be offered within a year.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Under the proposals, not only will borrowers be relying on lenders to process the case in seven days, the bank will also require a valuation of the property to be carried out. This will be less of an issue on lower loan-to-values as AVMs (automated valuation models) are available. The latter would have to become more commonplace in order to make a seven-day switch achievable.

“If the borrower gets into the habit of switching their mortgage frequently because it is easier to do so, then numerous credit checks could affect their credit rating, subsequently damaging their long-term prospects.”

He added: “This idea has been around for current accounts for a while and hasn’t exactly led to the breakup of the current account oligopoly we have today. It could have a similarly limited impact on the mortgage market, particularly when you consider that there are many people paying more than they need to on their lender’s standard variable rate because of a general apathy towards remortgaging, particularly when interest rates are so low.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

ISAs: your back-to-basics guide for 2018/19

Here’s everything you need to know to make the most of your unused ISA allowance ahead of the 5 April deadli...

A guide to Sharia savings accounts

A number of Sharia savings products have upped their game in recent months, beating more familiar competitors ...

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

  • RT @YourMoneyUK: Government plans cut to minimum shared ownership stake
  • RT @WeareJust_PR: “Families tend not to talk about money and death. But if we don’t talk about these themes it becomes very hard to make pr…
  • RT @RoyalLondon: Voluntary NI contributions to state pensions have risen - @stevewebb1 hails this as “great news that the message is gettin…

Read previous post:
Young people rely on credit to fund key life milestones

Young people are confident they will hit key life milestones earlier than their parents did but are more likely to...