New rules announced to help UK mortgage prisoners
The City watchdog has removed barriers to help trapped mortgage customers switch to a better deal.
The Financial Conduct Authority (FCA) today confirmed the introduction of new rules to help so-called mortgage prisoners, which are consumers who would benefit from switching but are unable to change to a more affordable mortgage despite being up-to-date with payments.
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Changes to the regulations will allow lenders to use more proportionate affordability assessments for customers who meet criteria such as being up-to-date with current payments and not looking to move house or borrow extra money.
Christopher Woolard, FCA executive director of strategy and competition, said: “We are removing barriers to switching in our rules and we would like to see firms make changes to their own processes quickly in order that customers can benefit as soon as possible.”
Under the changes, customers will also be able to borrow money to finance the switching fee and inactive lenders must develop and implement a strategy for contacting relevant customers.
Jameel Lalani, head of mortgages at Moneysupermarket, said: “Nobody should be in a situation where they’re stuck in a mortgage arrangement they can’t get out of.
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“The new rules outlined today by the FCA should make life easier for the so-called ‘mortgage prisoners’ to engage in the market, find the right product for their needs and put an end to needlessly overpaying on their home loan.
“By removing the barriers to switching, it should also drive innovation and competition amongst lenders, which should only increase consumer benefit.”
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