Around 150,000 so-called mortgage prisoners are unable to move to a more affordable home loan despite being up to date with their mortgage payments. They are trapped because either they took their mortgage out before the financial crisis and now do not meet stricter lender criteria introduced after the crash, or their lender is inactive or unauthorised to offer new loans.
But the Financial Conduct Authority (FCA) confirmed today that lenders will be able to use a “more proportionate” affordability assessment for remortgaging or switching mortgage prisoner customers who are up to date with their mortgage payments, do not want to borrow more, and want to remain at their current property.
The FCA also said lenders acting for inactive or unregulated firms will have to contact customers to tell them it has become simpler and easier for them to switch to another lender.
Christopher Woolard, executive director of strategy and competition at the FCA said: “Mortgage prisoners are often stuck on more expensive mortgages. We are removing barriers to switching in our rules and we would like to see firms make changes to their own processes quickly in order that customers can benefit as soon as possible.”
The FCA has made some changes to its proposals in light of feedback received to its consultation, which include simplifying the definition of a more affordable mortgage and allowing eligible consumers to finance intermediary fees, as well as product or arrangement fees, through the new mortgage.
Source yourmoney.com 28/10/19
Stuart Jacob one of our mortgage experts says “The new rules from the FCA should make things easier for those trapped in mortgages with uncompetitive terms to engage with the market.”