Saffron BS looks to release ‘mortgage prisoners’

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Saffron BS looks to release ‘mortgage prisoners’

Saffron Building Society’s broker channel has launched a product aimed at mortgage prisoners looking to change deals.

Anita Arch, head of mortgage sales for the society, said: “The plight of mortgage prisoners locked into existing deals because of the mortgage market review affordability rules has been well documented.

“We believe this deal will be welcomed by borrowers who thought they had no way out of their existing mortgage and we are expecting significant interest from brokers.”

The transitional mortgage product has a maximum loan-to-value of 75 per cent, a 3.99 per cent rate for five years before it reverts to the society’s standard variable rate, a £995 arrangement fee and a loan size of between £30,000 and £500,000.

Existing mortgages must have been held for three years with no additional borrowing or second charges during this period.

The product applies under the terms of the FCA’s transitional rules, before the European Mortgage Credit Directive is introduced in March 2016.

Following the introduction of MMR on 26 April 2014, industry figures have expressed concerns about consumers being trapped in their existing mortgage arrangements.

Robert Thickett, policy adviser for the Building Societies Associaton, said: “The sort of headlines we initially saw in the wake of the MMR warning that borrowers have been unable to get a mortgage as a result of their spending habits have fortunately not become a trend.

“Unfortunately, lenders failing to employ the transitional rules to ensure existing clients are not trapped on more expensive rates has become an issue.”

Adviser view

Paul Clifford, director of Sussex-based Clifford Osborne, said: “If a building society is willing to bring out a product that can help mortgage prisoners remortgage and take advantage of lower rates – even if that is fixed – then that is a positive thing.”