FCA removes barriers for mortgage prisoners

The FCA has today confirmed that it has removed barriers that stop some mortgage customers from finding a cheaper mortgage deal.

The new rules allow lenders to use a difference and more proportionate affordability assessment for customers who meet certain criteria, such as being up-to-date with payments under their existing mortgage and not looking to move house, or borrow more (except to finance certain fees).

The regulator also confirmed that customers of inactive lenders and firms not authorised for mortgage lending (who are unregulated) will have to be contacted and told that it has become simpler and easier for them to switch to another lender.

“Responsible lending is hugely important, and unaffordable borrowing is a cause of significant harm, “FCA executive director of strategy and competition Christopher Woolard stated.

“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 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.

The new rules come into force immediately.

    Share Story:

Recent Stories


FREE E-NEWS SIGN UP

Subscribe to our newsletter to receive breaking news by email.


Every Mortgage Tells a Story
Vida Homeloans is the award-winning specialist mortgage lender for residential and buy to let customers who may not fit the criteria currently demanded by high street lenders. View this video now on how Vida help those in their personal circumstances or their investment strategies.