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FCA confirms help for mortgage prisoners

The Financial Conduct Authority (FCA) has confirmed the removal of barriers stopping some mortgage customers from finding new mortgage deals.

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The rules allow lenders to use a different and more proportionate affordability assessments for customers who meet certain criteria, such as being up to date with payments under their existing mortgage, not looking to move house, or borrow more.

 

The FCA also confirmed that customers of inactive lenders and firms not authorised for mortgage lending – who are unregulated – will have to be contacted and told of the new rules.

 

The regulator said it has made changes to the proposals in light of feedback it received to its consultation. Those 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.

 

Christopher Woolard, executive director of strategy and competition at the FCA, said: "Responsible lending is hugely important, and unaffordable borrowing is a cause of significant harm. 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.

 

"We are also taking steps to help those who have mortgages with inactive lenders or unregulated entities to ensure that they are aware that they may now be able to switch and save money."

The changes take effect immediately, the FCA said.

 

Make sure you’re at the Mortgage Conference at the Lending Summit on November 12. Click here to book your place.

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