Following its update earlier this year, the FCA has published a technical note on switching in the mortgage market which includes more in-depth analysis. Key findings include:
- since the mortgage market study (MMS) (H2 2016) the number of mortgages on reversion rates for longer than 6 months has fallen to 1m as of H2 2021 (the MMS found c.2m mortgages with active lenders on reversion rates);
- of these, 150,000 mortgages are near term and 70,000 mortgages are in payment shortfall and would not be able to be switched on to a new deal;
- the number of mortgages on reversion rates where borrowers would save money by switching has also fallen – of the remaining 780,000 mortgages, 370,000 would save money by switching and that 190,000 would be unlikely to save by switching (this contrasts with the MMS which found at least 800,000 where borrowers would save money by switching); and
- there are c.370,000 mortgages where borrowers could save an average of £1,240 a year for 2 years by switching to a 2-year fixed rate with their existing lender. However, those borrowers would not all save equally – around 110,000 would save less than £500 a year for 2 years, 110,000 would save between £500- £1,000 and 150,000 would save over £1,000 a year for 2 years.