in the know

Mortgages: Homeowners could switch deals ‘in seven days’

Homeowners could be offered the option of switching their mortgage supplier within a week, under plans being considered by the government. 

A consultation will consider whether the procedure for swapping mortgages could be made as fast as that for changing bank accounts.

At the moment it can take up to three months to transfer to a new provider.

The idea is part of wider government plans to encourage switching, as announced in the Queen’s Speech.

Phone providers could also be forced to “unlock” mobiles for free, at the end of a contract.

Currently consumers have to pay up to £48m a year for that service.

The government also wants the switching process to be speeded up in a number of other markets, including energy, broadband, and current accounts.

Affordability checks

Under proposals in the Digital Economy Bill, consumers would only have to deal with a new provider – as currently happens under the seven-day switching service for bank accounts.

The document also seeks views on a range of other proposals to help consumers, including requiring that customers should be able to cancel contracts online if they signed up for them online.

“I want to give consumers more power over switching providers for the services they rely on, to make sure they are getting the best deals,” said Sajid Javid, the Business Secretary.

However, critics argue that changing a mortgage is not as simple as switching a bank account.

Mortgage borrowers face detailed affordability checks, while lenders also require surveys of the property concerned.



Mark Harris, chief executive of mortgage broker SPF Private Clients, said swapping mortgages frequently could affect borrowers’ credit ratings.

He also warned that mortgages could become more expensive.

“Lenders model pricing on account of how long they anticipate borrowers staying with them, so if there is a lot of chopping and changing as borrowers become more short-termist in their outlook, then pricing and early repayment charges could be forced upwards,” he said.

The Council of Mortgage Lenders (CML) said it supported faster switching, but questioned whether a one week timescale was practical.

“Whether a seven-day target is realistic, given tasks that lenders need to complete to fulfil risk and regulatory requirements, depends on when the clock starts ticking,” said Paul Smee, the CML’s director general.


Hargreaves Lansdown, the investment and pension provider, has written to the government to suggest that people should also be able to transfer their pension to a new provider within seven days.

“What’s good for banking and mortgages would be just as relevant for pensions, said Tom McPhail, head of retirement policy at Hargreaves Lansdown.

“Average transfer times have improved enormously, however there are still too many unnecessary and unacceptable delays.”