The Financial Conduct Authority (FCA) has revealed that it has started a review of the mortgage market in an attempt to find out if competition between lenders is actually working well, with concerns that borrowers are missing out on the best deals.
Concerns cover whether new entrants are being prevented from entering the market, and how easy it is for borrowers to find out information on mortgage products and services .
Regulators are worried that information can be difficult to obtain and understand, leading to borrowers being at a disadvantage. They may miss out on the best deals, face unexpected costs later on, or struggle to switch lenders after a loan has been taken out.
These issues are especially important for first-time buyers, who are trying to get onto the housing ladder, which is a difficult task.
Although record low interest rates are currently available, house prices are at record highs. The Bank of England has consequently introduced some restrictions on banks, to limit the amount of high loan-to-income lending they can perform. This is in an attempt to reduce the risk of financial instability in the mortgage market.
“A mortgage is one of the biggest, if not the biggest, financial transaction millions of consumers will enter into in their lifetime,” said Christopher Woolard, of the FCA.
“The mortgage sector also plays a vital role in the financial services industry and many areas of the economy.”
It is hoped this review will result in clearer information, lower prices and an improved customer service.
