Cheaper mortgages with new rules?

New rules proposed by the Financial Conduct Authority (FCA) could mean cheaper loans being recommended to mortgage hunters.

As part of their Mortgages Market Study, the regulator has asked mortgage advisors to tell their clients why the cheapest available deal has not been recommended to them.

In a statement it said: “Where a mortgage adviser recommends a mortgage which is not the cheapest of those that meet the customer’s needs and circumstances, they will now be required to explain why any cheaper mortgage has not been recommended.”


The watchdog says it should mean more people understand why they have been offered a loan at a certain price and gives them the chance to challenge any recommendation.

In its research the FCA found that 30 per cent of consumers have not been finding the cheapest mortgage available to them and are overpaying for their loans even when they get advice.


The regulator also wants to make it easier for firms to present a range of mortgage options for the client to make up their own mind without regulated advice being given and make it clear that some forms of interaction, such as a firm helping a borrower to complete their application, does not require advice.

The clarity offered should help firms to develop new tools to help people choose and buy a mortgage, said a spokesman.


Christopher Woolard, the FCA’s director of strategy and competition, said: “The mortgage market is working well for most customers but we have identified some areas where our rules are acting as a barrier to innovation.

“The changes we’ve announced today will allow firms to develop products and services which can truly meet the needs of customers.”

The regulator has opened up the new rules for consultation until July 7th and will publish the final version towards the end of the year.


The changes will benefit first-time buyers looking for the cheapest possible deal, but experts say anyone who already has a mortgage can already save thousands by switching.

Mark Gordon, head of mortgages at comparison site, said: “We also know that there are still a staggering 920,000 homeowners in the UK languishing on standard variable rate (SVR) mortgages and many of these households could be getting a better deal.

3% cheaper

“An SVR is typically around 4.5%, and can be as high as 6%. By comparison, the lowest two year fixed rate deal available is over three percentage points cheaper.

“Such a rate on every £100,000 could mean a saving of £3,000 a year!”