Mortgages less of a risk
Competition for mortgages is likely to heat up now that consumers understand more about the risks they are taking on, a new report reveals.
The findings, from the first stage of a review carried out by the Financial Services Authority (FSA), show that buyers are actively shopping around for their mortgages. In addition, ‘Key Facts’ documents provided by mortgage firms have lead to more customers being informed of the positive and negative aspects of taking out a mortgage.
The review investigates the effectiveness of the mortgage regime introduced by the FSA two years ago. The main focus of the review was on how much information is made available to consumers before a sale, and what help and advice firms offer to their customers.
The review identified that over 75% of consumers now shop around for their mortgages. They use the information they gather to compare the various prices and risks before committing to taking out a mortgage.
Dan Waters, Director of Retail Policy Division at the FSA, said, “The review so far suggests things are moving in the right direction, although changes to consumer behaviour are likely to happen only gradually. Mortgage regulation is still relatively new and we have planned the effectiveness review in stages to identify trends and measure progress against the intended outcomes over time.
“These findings also confirm the importance of firms giving out Key Facts disclosure documents to their customers as our rules require. Well-informed consumers are essential for a competitive market, and Key Facts documents are designed to be clear, fair and not misleading and to help consumers shop around to get a good deal”.
The next stage of the review, to be carried out next year, will focus on parts of the mortgage market where the FSA believes there is more likely to be consumer dissatisfaction, including lifetime mortgages. It will also look further at whether consumers are treated fairly over the life of their mortgage, including when they go into arrears.
This was posted in Bdaily's Members' News section by Ruth Mitchell .