Mortgage loyalty costs £1,000 a year

New analysis has indicated that 42% of people whose fixed-term mortgages have ended since lockdown began in March 2020 may be paying a ‘loyalty penalty’ of high interest according to new Citizens Advice research.

The charity found one in five (21%) customers who did not switch said the process was too time-consuming.

Many have also been unable to switch due to circumstances outside their control, such as mental or physical ill-health and additional pressures resulting from the coronavirus pandemic.

Alistair Cromwell, acting Chief Executive said “The pandemic has had a devastating impact on household finances. While the FCA acted fast to protect mortgage customers from the more immediate impacts of the pandemic, many will be facing long-term financial difficulty in the months and years to come.”

“As the pandemic continues to take its toll on our finances, employment, health and relationships, it’s more important than ever that customers aren’t penalised for not switching.”

“As Covid support schemes come to an end, tackling the loyalty penalty is one way that regulators can protect consumers from unfair and unnecessary costs.”

“It’s more important than ever that customers aren’t penalised for not switching. The Financial Conduct Authority estimates not switching can cost borrowers £1,000 a year extra.”

Citizens Advice surveyed more than 3,400 people in August 2020 and carried out additional work with more than 900 in September 2020.