The latest member survey by the Intermediary Mortgage Lenders Association (IMLA) found that four-fifths of lenders and two-thirds of brokers believe the idea floated by the government will not work.
Lenders were the most cynical about the proposals, with 59% believing that seven-day switching is a bad idea, compared to 22% who think it is positive. Among brokers surveyed, two-fifths were against the plans while a third welcomed the proposed service.
The plans were suggested in May during the Queen’s speech, in a bid to boost consumer rights outlined in the Better Markets Bill.
Peter Williams (pictured), executive director of IMLA, said: “These findings show that the industry is clearly sceptical about the chances of the seven-day switching scheme being implemented effectively in the mortgage market, and whether it will indeed benefit consumers. The continued strength of lending would certainly suggest that consumers are not shy in coming forwards to remortgage under the current rules of engagement, which aren’t standing in the way of favourable rates and strong competition.”
Over three-quarters of lenders said valuations were likely to be a significant barrier to the seven-day switch, while 70% cited difficulties fulfilling risk and regulatory requirements and 44% naming affordability checks.
For brokers, risk and regulatory requirements were the main concern with 78% citing this as a barrier, while 37% said automated valuation models were likely to produce inaccuracies, further delaying the process.
Despite the findings, both lenders and brokers view remortgaging as the market segment with the best future potential for growth for the remainder of 2016.
Some 59% of lenders and 43% of brokers expect the remortgage market to overtake the first-time buyer market, which was tipped for the greatest growth prospects in IMLA’s survey during the first half of 2016.
Williams added: “Lenders and brokers both agree that balancing key parts of the approval process – such as getting valuations and fulfilling risk and regulatory requirements – will be difficult to reconcile with reducing switching time to just seven days. It is clear the industry believes reducing mortgage switching to such a short window is incompatible with responsible lending practices.
“While consumers may benefit from being able to switch a bank account or broadband provider in a short timeframe, the fact is that a mortgage is a much more significant purchase. It is important that the lending process makes adequate checks to support positive consumer outcomes, and it should therefore not be rushed.”