It could be possible to switch between mortgage lenders in just seven days in the near future.
This is just one of many proposals the government is consulting on as part of plans to improve competitiveness in the mortgage market.
The idea was hinted at in the Queen’s Speech, but was formally announced last week as part of the upcoming ‘Better Markets Bill‘ which aims to “improve Britain’s competitiveness and open up markets, in a bid to empower consumers with greater choice.”
The proposals could be in place as early as 2017.
Only need to deal with your new lender
Under the proposals, if you wish to remortgage you would only have to deal with your new mortgage lender who should handle the switching process, just like the seven-day bank account switching service set up in 2013.
More power to switch all household services
It’s not just mortgages the government proposals are considering. Homeowners could change a range of services, such as home loans, broadband, mobile phone and energy provider, in just seven working days under the plans.
Speaking about the Better Markets Bill, Business Secretary Sajid Javid, said:
“I want to give consumers more power over switching providers for the services they rely on, to make sure they are getting the best deals.”
Is it actually possible?
Remortgaging is not as straightforward as switching a bank account, given the detailed affordability checks, property surveys and number of different fees that are associated with the process.
The Council of Mortgage Lenders (CML) while supportive of the faster remortgaging processes had questions on whether a seven day switch was possible, stating:
- Existing regulatory requirements make it harder to switch mortgage on a tight timescale than in other sectors.
- The mortgage market has recently been reviewed by the Financial Conduct Authority and a competition study is already underway this year
- There is no evidence to suggest timescales to complete remortgages are a barrier to switching between lenders
12 weeks to remortgage is “far too long”
While seven days might be a difficult target to reach, the current process of remortgaging typically takes up to 12 weeks. Is this too long?
Ann Robinson, Director of Consumer Policy at uSwitch, says:
“The current process of spending up to 12 weeks trying to change mortgage provider is far too long. We’re already seeing some encouraging innovations from providers, such as the one day in-branch mortgage approval service from HSBC and Lloyds Bank considering a new mortgage video interview service – but more needs to be done to speed up switching times.”
Compare remortgaging deals today
If you can’t wait for new switching regulations to come into effect, compare remortgaging deals today to see if you could switch to a cheaper rate.