In the face of rising interest rates and a rising cost of living, The Financial Conduct Authority (FCA) has said that it would be extremely wise for banks, lenders, and advisor to encourage homeowners to switch mortgage products. Doing so could save you thousands of pounds!
Oportfolio, as a mortgage brokerage and financial advisory service, have been trying to push our clients to switch to new deals since we first identified the rising cost of living and inflation off the back of the COVID-19 pandemic. Now it seems that even national financial institutions have finally come to the same conclusion.
The FCA has released a new statement which estimates that 150,000 mortgage borrowers could save over £1,000 a year for two years by switching from their current product on to a more comfortable and safer new product. These mortgage customers that they are talking about are the people who either have never fixed their mortgage rate (for 2, 5, or 10 years) or people who have come to the end of their fixed rate and are currently sitting on the lender’s standard variable rate. In an article earlier in the year, we went into full detail about what the SVR is but essentially the bank will have a standard rate that when you finish your fixed rate mortgage, you will automatically fall onto which is often a lot higher than other rates. This rate can also increase with the Bank of England’s base rate increase.
Why Do The FCA Recommend We Switch Mortgage Products?
In its statement, the FCA said: “Given the rising cost of living, it’s important that borrowers consider their options and switch if they can where it meets their needs and circumstances and saves them money. Lenders and mortgage intermediaries should support customers to do this, and we recently asked lenders to consider what more they can do to encourage mortgage borrowers to think about switching to a less costly option where that is available. We will continue to monitor the market, particularly given the impact on borrowers of increasing mortgage rates and the rising cost of living and consider what further steps we may need to take.”
What Do The Mortgage Experts Say?
Content and communications manager for Oportfolio mortgages Louis Mason comments: “This is something that we have been telling our clients for over a year now. We regularly contact our client bank to go through financial health checks with them to make sure they are still on the absolute best deal for their circumstances and the current economic climate.
The amount of people who don’t realise that they are overpaying on their mortgage is too high and its our responsibility as mortgage advisors to help anyone we need our help. Some people are put off by the prospect of switching mortgage products or remortgaging because they incorrectly think that it will be too much hassle or too complicated, when, it really isn’t.
Whether you are one of our clients already or not, all you need to do if you want to explore your mortgage product options is give us a call or send us an email. One of our advisors will then have a telephone appointment initially with you just to get an idea of your current mortgage situation, they will then do all the leg work for you to find a suitable replacement mortgage and product. Then as long as you are happy with the recommendation, the advisor and their administration team will apply for your product transfer or remortgage. Normally, with either option, the application process is a lot smoother than a brand-new mortgage and your offer, and your more manageable payments will be at your door before you know it.”
If you or anyone else you know is interested in switching your mortgage product, then please feel free to give our team a call today to see how we can help.