Relief on its way for mortgage prisoners

by Cheyne Wilcocks MSc, DipPFS | 29th March 2019 | What the papers say

Sources -
https://www.fca.org.uk/news/press-releases/fca-acts-help-mortgage-prisoners
https://www.ftadviser.com/mortgages/2019/03/27/fca-tackles-mortgage-prisoners-with-new-rules/

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.

Thankfully, we at Lawrie Mortgages have access to solutions that will protect a certain level of income for a predefined period should unfortunate circumstances arise for those who would find it difficult to prove a consistant level of income.

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.

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