Plans to give homeowners the option of switching their mortgage provider within just one week are being considered by the Government, as part of an effort to make switching easier for consumers across a range of sectors.
A time limit on switching of seven working days is already in place for current accounts and now the Government wants to look into whether a similar approach would work more widely, including with mortgages.
It typically takes around six weeks to switch mortgage, but often takes as long as three months.
In a consultation launched today, consumers and industry leaders are being asked to provide evidence of how proposals to bring about faster and more consistent switching across a range of sectors could be implemented.
It is thought new rules could be in place as early as next year.
However, it's difficult to compare switching a mortgage with switching a bank account – as switching a mortgage is far more complicated due, in part, to the fact that mortgage borrowers face detailed affordability checks.
If you're thinking about switching your mortgage, check out our latest Remortgaging guide.
What's in the Government consultation?
The consultation follows promises made in last week's Queen's Speech, in which a range of consumer-friendly legislation was outlined – including proposals to introduce a legal right to a "fast broadband connection".
The focus of the consultation is to force the providers of a range of services – such as broadband, energy and mortgages – to make it easier, and faster, for their customers to switch and therefore make it less likely people will miss out on cheaper deals.
Currently there's no consistency between sectors on how long it takes for consumers to switch from one service provider to another.
Seven-day bank switching a potential forerunner to quicker mortgage movement
Discussion around the prospect of seven-day mortgage switching comes almost three years after the launch of a guarantee to ensure banking customers can swap accounts within a week.
This was designed to bring about the end of the age-old fear that by switching bank account you'll miss crucial payments such as mortgages, council tax, or that your employer will send your salary to your old account.
Under the previously-introduced Current Account Switch Service, you're able to nominate any switching date to move to your new account, provided it's seven working days or more away. Before the guarantee, switching took about 18 to 30 working days.
Talk of quicker switching coincides with debate around 'mortgage prisoners'
Last week, George Osborne wrote to mortgage lenders following a meeting with MoneySavingExpert.com founder Martin Lewis about the plight of so-called 'mortgage prisoners'.
However, Martin said the Chancellor's letter only addressed "a fraction of the problem".
Osborne's letter urged lenders to use temporary arrangements which allow affordability checks to be waived – to prevent borrowers being trapped on their existing mortgage deal.
But Martin reiterated his stance that it's important a competitive mortgage market is created so people don't become 'mortgage prisoners', trapped into using their existing lender.