Concern of loyalty penalty as terms change

More than two-fifths (42%) of people in the UK whose fixed-term mortgages have ended since the start of the first lockdown in March last year have taken no action to switch, according to Citizens Advice.

The charity fears these home owners could be paying a loyalty penalty.

According to the Financial Conduct Authority, not switching could leave loyal mortgage customers typically paying an extra £1,000 a year.

Citizens Advice is warning the burden is falling on consumers to get the best deal – and those who do not switch are at risk of paying over the odds.

The charity network said its research suggested disabled people and carers were more likely to see a price increase at the end of their mortgage contracts.

More than one-in-five (21%) mortgage customers who did not switch said the process was too time consuming or difficult. 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 Covid-19 crisis.

Citizens Advice said: “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.”

Citizens Advice voiced mortgage concerns.