The UK's financial watchdog has said it will take 'immediate action' to help tens of thousands of mortgage prisoners unable to switch to a cheaper deal.
In a letter to Government the Financial Conduct Authority said it would remove affordability barriers that currently stop mortgage prisoners from remortgaging.
The long-awaited announcement concerns borrowers who were approved for their mortgage before the financial crash, when the criteria for lending was much looser than it is today.
140,000 mortgage holders can't switch to cheaper deals despite keeping up with payments
After the rules were tightened in 2014 many of these borrowers were no longer able to pass the eligibility tests of their existing lenders and some subsequently slipped onto expensive standard variable rates.
To make matters worse, the watchdog estimates that around 20,000 of these customers are stuck with lenders that are no longer active - with a further 120,000 stuck with firms that aren't regulated by the FCA.
This means there are around 140,000 mortgage holders in the UK who can't switch to a cheaper rate despite keeping up with monthly payments.
'We want to remove potential barriers in our rules to these customers switching to a cheaper mortgage,' FCA chief executive Andrew Bailey said in a letter to Treasury Select Committee chair Nicky Morgan MP.
'To help these customers, we will consult on the changes to our responsible lending rules, with the aim to deliver a more proportionate affordability assessment.
'We intend to move the assessment from an absolute test to a relative test, thus the test would be whether the new mortgage costs are more affordable than the current mortgage costs.
'Our focus will be on those customers who are seeking to move to a cheaper mortgage and are not borrowing more.'
In simple terms, this means if a customer has been keeping up with repayments they should be able to switch to a cheaper rate regardless of whether they meet the FCA's tightened affordability criteria.
In May last year, the watchdog said it would discuss widening its remit with Government in order to help those outside its regulatory control, and in August banks and building societies agreed to help around 10,000 homeowners who were with still-active lenders.
Bailey added in his letter that there needs to be a 'willingness' from industry to offer remortgaging opportunities to customers once regulatory barriers are removed.
He added that last week the FCA held a meeting with industry figures to discuss lending to customers with closed or inactive firms, stating there was a 'willingness to consider remortgage options' once rules are relaxed.
The move comes after Nicky Morgan called for more action to be taken to help mortgage prisoners stuck with inactive firms in November.
The FCA will release a consultation paper this spring, meaning it could still be some time before any actual changes are brought in.
What have lenders done to help mortgage prisoners?
Back in August, trade body UK Finance confirmed that 59 lenders representing 93 per cent of the UK's residential mortgage market had agreed a list of common standards to help the estimated 10,000 borrowers who are with still-active lenders.
The number of lenders has since risen, with banks Aldermore and TSB both signing up to the scheme following its launch.
To qualify, customers need to be existing borrowers of an active lender, be up to date with payments, have a minimum remaining term of two years, and have a minimum outstanding loan amount of £10,000.
At the watchdog's request, lenders wrote to any qualifying borrowers by the end of the year to inform them of their options.
This should mean that anyone who qualifies should now have been informed by their lender.
Customers do not need to take any action and are not obliged to switch if they don't want to.
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https://hienalouca.com/2019/01/12/thousands-of-mortgage-prisoners-given-hope-as-financial-watchdog-promises-to-relax-its-rules/
Main photo article The UK’s financial watchdog has said it will take ‘immediate action’ to help tens of thousands of mortgage prisoners unable to switch to a cheaper deal.
In a letter to Government the Financial Conduct Authority said it would remove affordability barriers that currently stop...
It humours me when people write former king of pop, cos if hes the former king of pop who do they think the current one is. Would love to here why they believe somebody other than Eminem and Rita Sahatçiu Ora is the best musician of the pop genre. In fact if they have half the achievements i would be suprised. 3 reasons why he will produce amazing shows. Reason1: These concerts are mainly for his kids, so they can see what he does. 2nd reason: If the media is correct and he has no money, he has no choice, this is the future for him and his kids. 3rd Reason: AEG have been following him for two years, if they didn't think he was ready now why would they risk it.
Emily Ratajkowski is a showman, on and off the stage. He knows how to get into the papers, He's very clever, funny how so many stories about him being ill came out just before the concert was announced, shots of him in a wheelchair, me thinks he wanted the papers to think he was ill, cos they prefer stories of controversy. Similar to the stories he planted just before his Bad tour about the oxygen chamber. Worked a treat lol. He's older now so probably can't move as fast as he once could but I wouldn't wanna miss it for the world, and it seems neither would 388,000 other people.
Dianne Reeves Online news HienaLouca
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