Published On: Thu, Jul 11th, 2019

Cheap mortgage rates: MP backs Mortgage Switch Guarantee campaign – can you save £1,000? | Personal Finance | Finance

Shadow City Minister Jonathan Reynolds sponsored a reception with online mortgage broker Trussle at the Houses of Parliament last night, to discuss the need for transparency and accessibility to mortgage switching. The Labour Co-operative MP announced his full backing of the proposal of a Mortgage Switch Guarantee. He explained that he has switched his own mortgage through Trussle, saving £150 per month. Speaking at the event, Mr Reynolds described the volume of people falling on Standard Variable Rate mortgages as a “genuine issue”, and called on the financial sector to “work better to serve our people”.

An estimated 800,000 consumers (10 per cent of mortgage holders) do not switch mortgages when they would benefit from doing so, according to the Financial Conduct Authority (FCA) report “Mortgages Market Study”.

The analysis indicates that “these 800,000 consumers who do not switch when they would benefit from doing so could save significant amounts”.

In fact, some mortgage-holders could save £1,000 on average, in the first two years (on a new two-year introductory deal).

Around £100 per year could be saved for the rest of the term of one’s mortgage, the report said.

Trussle are calling for a Mortgage Switch Guarantee, which would force lenders to display the true cost of a mortgage, allow borrowers to access key information digitally, and contract borrowers three months before the end of their initial term.

Last night, Trussle’s founder and CEO, Ishaan Malhi, was joined on a panel by the Shadow City Minister, and representatives from Atom Bank and the Citizens Advice Bureau.

Atom Bank’s Director of Lending, Maria Harris urged the end of the term Standard Variable rate.

She warned: “There is nothing standard about falling onto a lender’s default rate.”

Ms Harris also called for more transparency over mortgage deals from lenders, saying “as we move into Open Banking, it should be simple for banks to do this”.

Morgan Wild, Senior Policy Researcher from Citizens Advice said that “better, smarter regulation to stop people falling onto SVRs” is required.

Mr Mahli called on the FCA to take inspiration from Ofgem and Ofcom, who have acted to curb so-called loyalty penalties in the energy and mobile phone markets.

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