Mortgage customers up to date with their repayments but are unable to switch could soon be able to find a cheaper deal after Financial Conduct Authority (FCA) proposals.
Earlier in the regulator’s investigations into ‘mortgage prisoners’, it was found that there are 150,000 mortgage customers in the UK unable to switch.
FCA analysis found that of that 150,000, there are:
In its final report of its Mortgages Market Study, the FCA confirmed its earlier findings that the mortgage market is “working well in many respects but falls short of the FCA’s vision in some specific ways”.
Its remedies package includes:
Christopher Woolard, executive director of strategy and competition at the FCA said: “The market is working well for many with high levels of customer engagement and competition. The package of remedies we are taking forward will benefit consumers by encouraging innovation and making it easier for them to find the right mortgage.
“We are particularly concerned about consumers – who are commonly referred to as mortgage prisoners – who are currently unable to switch. That is why we are acting now to help remove potential barriers in our rules. These changes should make it easier for consumers to get a more affordable mortgage.”
The FCA has proposed that, for those customers who are up-to-date with their mortgage payments, and seeking to move to a more affordable deal without borrowing more, active lenders will be able to undertake a more proportionate assessment of whether they can afford the new loan.
It added it is “particularly concerned” about customers of inactive lenders and entities not authorised for mortgage lending as they are unable to move to a new deal with their existing lender.
To ensure these customers are made aware of this change, inactive lenders and administrators of entities not authorised for mortgage lending will be required to review their customer books to identify and contact eligible customers.