On 26 March 2019, the FCA published its final report on the mortgage market study.

The FCA found that the mortgage market works well in many respects. Engagement is high and consumers are getting mortgages that are suitable and affordable.

However, the FCA also found that the mortgage market falls short of its vision in certain ways leading to harm for some consumers who pay more than they need to for their mortgage. There are limitations to effectiveness of the tools available to help consumers choose a cheaper mortgage. In addition, some longstanding borrowers on a relatively high reversion rate cannot switch.

The FCA proposes the following remedies:

  • seeking to speed up more widespread participation by lenders in innovative tools to help customers more easily identify mortgages they qualify for;
  • consulting on proposals for new lending rules on how lenders assess whether or not a customer can afford to switch to a new loan;
  • consulting in Q2 2019 on proposals to change mortgage advice rules and guidance to help remove potential barriers to innovation;
  • a proposal for the Single Financial Guidance Body to develop a directory to help customers make a more informed choice of mortgage intermediary;
  • further analysis to understand more about those customers that do not switch mortgage to inform any necessary intervention.

In most cases the FCA has sought to address issues through collaboration with industry in the first instance, rather than through rule changes.

A research note extending findings in Occasional Papers Nos. 33 and 34 will be published shortly.