Lenders have begun to offer products under rules designed to make it easier for mortgage prisoners to switch to a more affordable deal.
Nikhil Rathi, chief executive at the Financial Conduct Authority (FCA), has told MPs seven lenders are now offering products to people looking for a better deal.
Appearing before the Treasury Committee last week (November 4), he said: “The steps that the FCA took are now, I think, bearing fruit to adjust the affordability rules to enable the affected to switch to a new lender, without the same affordability checks as would be needed under normal circumstances.
“Those rules are now in place, and we have seen approximately seven lenders I think, so far, have started to offer products, including three of the largest lenders in the country, to enable people to switch, should they choose to.”
Mortgage prisoners are customers who have previously been unable to switch mortgages despite being up-to-date with their payments.
The FCA changed its rules last year to allow lenders to assess affordability based on a mortgage prisoner’s track record of making mortgage payments if they are not looking to move house, or borrow more.
The West Brom Building Society, for example, implemented affordability rules last month designed to make it easier for mortgage prisoners to switch to a more affordable deal.
Halifax and NatWest have also introduced lending criteria specific to mortgage prisoners, while Santander began accepting applications from mortgage prisoners last week (November 2).
Jane King, director and mortgage adviser at Ash-Ridge, said she was pleased to see lenders “finally” offering assistance to mortgage prisoners.
“It has been a long time coming,” Ms King said, describing the initial response from some lenders as “very lacklustre”.
But Corey Whelan, director at Cambridgeshire Money, said he believed the uptake from lenders had not been “massive”.
Mr Whelan added: “I’m not sure if it’s a case of other lenders waiting to see what the initial launch is like before deciding to dip their toes in, but hopefully more lenders will start to come to the market to really give these customers a chance.”
A spokesperson for the APPG on Mortgage Prisoners commented: “The APPG wants a list of all the lenders using the new test or willing to modify their affordability criteria for mortgage prisoners to be published.”
What do you think about the issues raised by this story? Email us on email@example.com to let us know.