In previous years, many people have been trapped in mortgage deals they couldn’t seem to get out of. It is therefore no surprise that the news regarding a seven day switching plan has got people talking. The new one week standard for those looking to move to a better deal is designed to make life easier for consumers and, anything that can be done to make these mortgage prisoners move to a better rate quicker and easier has to be seen as a positive move.
Standard vs specialist
I have recently completed a standard remortgage which achieved a completion time of three weeks. Therefore, there is absolutely no reason why a straightforward remortgage that is fully packaged on the high street and subject to the valuation being ok can’t be completed inside four weeks.
On the other hand, in specialist cases where there are more unusual circumstances due to income,age, credit history or type of property, more human involvement is required and although a remortgage tends to be easier than a purchase, four weeks is probably unrealistic. Therefore, when comparing specialist lenders to high street lenders, there is a vast difference in terms of timescales because, unlike high street lenders, specialist lenders do not deal with vanilla clients or use a systematic approach. They are about providing a solution that is not widely available and is not about the speed.
A competitive market
The new seven day switching plan aims to boost competition in the market between lenders,building societies and other providers and, because they are always looking to get new clients, it’s likely that they will rise to the challenge, while offering borrowers a better service as a result.
I believe it will also help lenders to strengthen the quality of their loan books because remortgages often have much lower LTVs and income ratios and, irrespective of whether the plan goes ahead or not, those who have an established track record on their mortgages will always be the type of business that lenders want to attract.
In my opinion, it is very promising to see that the government is getting more involved and is starting to question why the process can’t be made faster and more convenient for consumers. It will certainly be interesting to see how the new standard will impact the market, particularly if it is implemented as early as next year.