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A positive step that’s easier said than done

26 May 2016

Gocompare.com comments on proposals for a seven day mortgage switching service

Matt Sanders, head of money at Gocompare.com, said: “The introduction of a seven day mortgage switch service, similar to that already in place for current accounts, would in principle go some way to encouraging customers to switch for a better deal. But while this is a positive step, it’s easier said than done and there are other things that could be easier to address and fix.

“Ultimately, any move that breaks down barriers to customers switching is a force for good in the industry, however further investigation into the reasons customers are not switching is what is really needed if we are to see more people engaging with the process. It’s great to make switching faster, but if nothing is done about the reasons why people aren’t considering a switch in the first place, then this is unlikely to do much to persuade those still baffled by the confusing and at times daunting mortgage selection process.

“Likewise, this initiative will require a significant amount of investment before all providers are able to fulfil this commitment confidently. The mortgage market is particularly institutionalised, with some lenders still relying on paper applications. As such, getting it up to speed could be a lengthy and expensive process, which ultimately mortgage customers could end up picking up the bill for through less competitive rates and higher fees.

“Perhaps an approach that involved picking off smaller problems throughout the industry would be a more effective alternative. By addressing other barriers such as early redemption fees, valuation fees and advice charges in the first instance there would be less to perturb would-be switchers in the early stages of changing products, which is where people are more likely to drop off.

“Regardless of the approach, any development will require substantial investment and close work with regulators before we see anything noteworthy in the market. As such, while a shake-up in the mortgage market is definitely needed, it’s unlikely we’ll see something that significantly benefits customers in the near future.”

For more information on switching mortgage, Gocompare.com has put together a beginners’ guide to mortgages.

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