Mortgage Prisoners Help on Its Way

Help is on its way for around 140,000 homeowners that have high interest mortgages and no options to switch to a better rate.

The Financial Conduct Authority (FCA) is looking into a change in affordability checks made by mortgage lenders as customers are failing these checks on affordability even though the rate and mortgage payments on any new mortgage is usually cheaper than their current one.

The changes would be for customers that want to simply switch their current high mortgage rate and would not be borrowers that are looking into borrowing more money or those with mortgage arrears, negative equity, high debts and very high to loan value mortgages.

The FCA will consider a two-tier system where in tier 1, bigger lenders offering simple mortgages to customers that have no arrears. Then for tier 2, look at specialist lenders to underwrite more complex mortgages.

The FCA will work closely with mortgage firms and trade bodies on the changing to lending rules to help these 140,000 mortgage prisoners.

Jackie Bennett, director of mortgages at UK finance (representing UK Banks) said: “a number of lenders have said they are willing to offer these customers their products”.