UK home owners find switching mortgages harder, new study finds

There has been a reduction in the number of home owners in the UK finding that it is easy to switch their mortgage since new rules were brought in under the Mortgage Market Review a year ago.

New research has found that mortgages are now the hardest financial product to switch among consumers who have shopped around for financial services in the last 12 months.

The research, conducted by comparison site Gocompare.com, shows that just 59% of people who recently switched their mortgage provider described the process as easy, a fall from 70% in July 2014 when the same survey was carried out.

The firm says that this reduction suggests the Mortgage Market Review, which was introduced at the end of April 2014, is continuing to frustrate consumers. The new system means that anyone needing a mortgage to buy a home, increase a current mortgage or re-mortgage needs to pass a more stringent affordability test, while interest-only applicants need to be able to demonstrate a credible repayment plan. 

MMR changes have subsequently been blamed for a fall in mortgage applications and delays in processing approvals.

‘It is clear from our research that consumers have taken issue with the changes to the mortgage application process introduced 12 months ago. To put it into context, the recent improvements in bank account and energy switching have failed to register at all on this survey, yet mortgages have slipped 11 percentage points,’ said Matt Sanders from Gocompare.com.

‘It would be fair to say that mortgages were never the most straightforward product to switch, but MMR has added an extra layer of complexity and in many cases led to delays in the process which just frustrates people further,’ he pointed out.

‘MMR has undoubtedly prolonged the process of applying for a mortgage, but a mortgage is still one of your biggest financial outgoings therefore it’s good to know that the importance of affordability is now at the heart of what they offer, which at the end of the day benefits the customer as well as providers,’ he explained..

‘Even though applying for a mortgage is more complicated, there has never been a better time to shop around and with record low interest rates, the hassle of going through the checks and balances might be worth it to save some cash every month,’ he added.

The research found that 90% of customers who switched home insurance providers in the last 12 months found the process easy, followed by 88% for car insurance, up from 84%, and 82% for credit cards. Changing broadband provider was easy for 72% and mobile phones for 70% with mortgages at the bottom of the table.

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Source: Property News Spain