Trussle proposes landmark set of industry standards – the Mortgage Switch Guarantee

By Bridging Loan Directory 18th July 2017

The UK’s first online mortgage broker Trussle is proposing that a new set of industry standards be introduced to the mortgage market, to offer consumers much needed support with switching. In a white paper published today, Trussle outlines five initial recommendations for a Mortgage Switch Guarantee, designed to address the wide-scale ‘switching inertia’ hindering close to three million UK mortgage borrowers, by close to £15billion every year.

The paper identifies several shortcomings in the mortgage market which are exacerbating this inertia, some of which are expected to be addressed in the FCA’s soon-to-be-published Mortgage Market Study. These range from a lack of uniformity and education around the pricing of mortgages, to inadequate communication from lenders when it comes to prompting customers to switch.

It also recognises that a large number of borrowers are not switching to more suitable deals because they are ‘mortgage prisoners’, trapped on Standard Variable Rates (SVRs) and unable to remortgage because they fail the stricter borrower affordability rules introduced by the Bank of England in 2014.

Trussle is proposing the creation of a Mortgage Switch Guarantee to address these issues and ultimately move towards a state of mortgage optimisation, where all UK borrowers are switching to the best available deals at the right time. To initiate the proposal, Trussle has made the following five recommendations, explained in more detail in the white paper:

Standardising and simplifying the way mortgages are priced and presented to customers
Improving lenders’ communication with customers when prompting borrowers to switch
An obligation for lenders to offer new deals to customers who are ‘mortgage prisoners’
A mandate for all mortgage brokers to have access to all deals on the market
Modernising a range of slow and outdated processes when it comes to switching

Ishaan Malhi, pictured, CEO and founder of Trussle, said:

“Millions of homeowners are collectively losing billions of pounds because switching mortgage isn’t clear or simple. The Mortgage Switch Guarantee will help put an end to this unfairness.

“We’ve spent the best part of a year speaking with thousands of borrowers and meeting with industry leaders from across the market to identify this ambitious but necessary set of standards. Thankfully there’s already consensus among senior industry figures that many aspects of the remortgage market are in need of improvement. But for the Mortgage Switch Guarantee to be a success, it will need to be widely adopted by lenders and brokers, and supported by regulators and government. We’ll therefore be speaking with and listening to feedback from these key groups in the coming months.

“The Energy Switch Guarantee, introduced last year after more than a decade of lobbying and hard work, has already helped five million energy customers save an estimated £1 billion. The impact of the Mortgage Switch Guarantee has the potential to be fifteen times greater, which is why we won’t be slowing down our efforts to deliver a fairer mortgage market for homeowners across the UK.”

Paula Higgins, chief executive, Homeowners Alliance, says:

“Unquestionably, changes must be made in the mortgage market. The fact that two million borrowers are on their lender’s SVR cannot simply be attributed to borrower apathy and ignored.

“Consumers have seen huge upheaval in the mortgage market over the last ten years and with the hoops they have to jump through to meet affordability criteria now it’s not surprising many would be confused by or fearful of getting a new deal. The mortgage industry must address this by making switching to a better deal as straightforward and safe as possible.”