Some 370,000 mortgage borrowers are not switching their mortgage deal when they could save money, according to the Financial Conduct Authority (FCA).
While this is down significantly from the 800,000 seen in 2016 it still represents a significant number of borrowers during a time when the country is experiencing a cost of living crisis.
The FCA’s recent analysis, using data from the second half of 2021 shows that 6.3 million mortgages (74%) are on fixed rates, typically fixed for between 2- and 5-years.
Of the 2.2 million (26%) on variable rates, around half are on discounted variable or tracker rates and half are on reversion rates.
The regulator estimates that borrowers of around 370,000 mortgages could save an average of £1,240pa for two years by switching to a 2-year fixed rate with their existing lender.
But those that it estimates would save would not all save equally. The FCA said that around
110,000 would save less than £500 a year for two years, 110,000 would save between £500-
£1,000 and 150,000 would save over £1,000 a year for two years.
While not all borrowers on a reversion rate who can switch would save money by switching
with 190,000 better staying put.
In a statement the FCA said: “Given the rising cost of living, it’s important that borrowers consider their options and switch if they can where it meets their needs and circumstances and saves them money.
“Lenders and mortgage intermediaries should support customers to do this and we recently asked lenders to consider what more they can do to encourage mortgage borrowers to think about switching to a less costly option where that is available.
“We will continue to monitor the market, particularly given the impact on borrowers of increasing mortgage rates and the rising cost of living and consider what further steps we may need to take.”
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