The government must be bold and liberate the mortgage market

Daniel Hegarty
City Bonuses Reach Record High
Let's put power back into the hands of consumers (Source: Getty)

A minority government, whatever shape it takes, must reassure the public it has their best interests at heart.

In the coming months it could have an opportunity to do just that, not with legislation, but by supporting attempts to improve a market central to the hopes and dreams of so many younger voters who made their voice heard in the election.

Millennials, the first generation to be worse off than their parents, turned out in unprecedented numbers, motivated by their desire for a better standard of living. Some of these were disillusioned voters seeking change after years of austerity, a distinct response to political choices. But remember that for many, home ownership is a critical part of the equation, and a major factor in how many people view their security and wealth.

So to help ordinary people, it is time to think beyond home purchasing, and put power back into the hands of consumers when it comes to managing what for most of us is the longest and largest financial commitment of our lives.

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Levelling the playing field

Today, the playing field between lenders, brokers, and homeowners is far from level. Mortgages are opaque and overly complex, meaning people struggle to identify and secure a fair deal, let alone the best available. Millions are left paying needlessly over the odds, some by a whopping £4,000 a year, according to HSBC .

But the government can act. Its regulator, the FCA, is due to release the findings of a study into this very issue in the coming months. It wants to know how we can better equip consumers to make effective choices when choosing or – just as importantly – renewing their mortgage.

We’ve already seen a compelling case for empowering consumers in other industries. Innovations in financial services, energy and telecoms have created a cultural revolution, where switching provider has become synonymous with saving money.

Yet mortgage owners in Britain don’t see their mortgage in the same way. Even among those who have switched in the last three years (a group that are themselves something of a rarity), just one in 10 considered it in the same vein as switching a utility provider to save money.

We have a consumer blind spot that needs to change. We must give consumers new tools to overcome mortgage paralysis and seek out better deals, without being beholden to a mortgage broker or lender.

Technology holds the key. It has the potential to motivate consumers by making it easy to be proactive, easy to save money by making a real choice. Both the industry and government have begun to recognise this fact, but the devil is in the detail.

Switching sites

The Conservative manifesto took a step in the right direction, proposing to investigate how websites for switching providers can better serve competition, including by providing more information about quality of service and complaints. But realise that, when it comes to mortgages, encouraging homeowners to become more reliant on switching websites could be to exacerbate a further issue.

Put simply, switching sites don’t always show the best deal. Teaser rates and arbitrary add-on fees conceal the true cost of a loan. This distorted picture can frequently lead consumers into the trap of overpaying.

To solve this problem, we must recognise the potential for a new breed of digital mortgage brokers to help consumers become better able to make considered choices in the mortgage industry.

Not only are we working to simplify the process, but also to make it more transparent and convenient – removing the leg work for consumers by continuously searching the 10,000+ deals available on the market and notifying homeowners when a better deal is available.

We look to the next government and the industry to be bold and make the mortgage market simple, flexible, accurate and transparent. In doing so, we can begin the journey to creating a nation of richer switchers, putting billions of pounds back into homeowners pockets.

Read more: Millions of Brits can save over £3,000 on their mortgage and don't know it

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