Improving the Mortgage Market

1 Awst 2018

Improving the Mortgage Market [ 120 kb] - full report.

Citizens Advice provides free, independent and impartial advice to anyone who needs it. In the last year, Citizens Advice advised 28,310 clients on professional and financial services including 4,002 mortgage and secured loan issues. Our data allows us to spot new pockets of consumer detriment and respond accordingly.

Our response to the FCA’s Mortgage Market Study Interim Report recommends:

Require lenders to prompt customers when their fixed rate is due to expire in a standardised format according to consumer preferences, by

Prompting consumers at 12 months, 6 month and 3 months before their fixed rate expires with benefits of switching clearly explained
Allowing consumers to select preferred method of for this communication from lenders
Set out the costs and benefits of switching in standardised and tested format

Label mortgage costs and rates more accurately, by

Renaming the standard variable rate to become the ‘expired rate’ for example
Including the total cost of credit included in all communications

In addition to these extensions to the FCA’s recommendations we propose the FCA give consideration to more substantive action to protect lower income consumers. We suggest the FCA conduct further research on and strongly consider:

Requiring lenders to give consumers whose income is recorded as below median income when making their initial application the opportunity to switch to a better deal
Implementing a relative price cap on SVRs to limit interest rate rise from fixed rates