Relief on its way for mortgage prisoners
by Cheyne Wilcocks MSc | 29th March 2019
Following the release of the final report of its Mortgage Market Study the Financial
Conduct Authority (FCA) published a consultation paper proposing changes in their affordability rules to help consumers trapped in mortgage deals
taken out before the financial crisis. These consumers find themselves in the unenviable position of being unable to change to better deals because of
the tightening on lending criteria that, understandably, took place post financial crisis.
What is more fustrating for these consumers is a lot of them are now with inactive and unauthorised lenders
so could only approach another lender when considering moving to another mortgage deal with the aim of reducing monthly payments.
The FCA proposals will enable lenders to take a more pragmatic view when considering affordability
when dealing with mortgage prisoners. Unfortunately, these changes are unlikely to help consumers who are in arrears, high loan to values (LTV), carrying
substantial additional debt and/or in negative equity. The proposals are targeted to help consumers who have demonstrated they are able to service their mortgage and do not want to
increase their current level of borrowing. The changes are likely to come into force later this year.
Although this is great news, it has taken a long time to get to this point and their are still a number of months to go before it becomes a reality and,
for some families, that maybe all it takes to knock them out of the running.