Nearly 60 mortgage lenders have pledged to help up to 10,000 ‘mortgage prisoners’ trapped on their existing deals.
The lenders have committed to help homeowners who can’t currently remortgage to a cheaper deal because of stricter affordability checks introduced following the Mortgage Market Review (MMR) back in 2014, or because their circumstances have changed since taking out the mortgage.
Those lenders include Barclays, HSBC, Coventry Building Society, Lloyds Bank, NatWest, Nationwide Building Society and Yorkshire Building Society, and represent 93% of the UK’s residential mortgage market.
To qualify, borrowers must be owner occupiers on a reversion rate (the rate you revert to when your incentive period finishes), up to date with payments, and looking for a mortgage on a like-for-like basis. There must be a minimum of 2 years left to run on the mortgage, and a minimum of £10,000 outstanding.
Earlier this year, the city regulator the Financial Conduct Authority (FCA) published an interim report into the mortgage market, which highlighted that more help should be offered to those who are struggling to get a new mortgage deal.
The FCA says there are around 150,000 mortgage prisoners in total, of which around 30,000 are with authorised lenders, and 120,000 are with lenders who are either non-regulated or no longer issue new mortgages, such as Bradford & Bingley and Northern Rock.
Around 10,000 have their mortgages with active lenders and can be helped by the changes just announced.
Jackie Bennett, director of mortgages at the trade body UK Finance, said: “Lenders have responded to the FCA’s challenge and made a voluntary commitment to help these longstanding borrowers, offering them the ability to switch to an alternative product if they meet the agreed standard criteria. Participating lenders will be contacting qualifying homeowners, so for now, customers don’t need to do anything but wait to hear from their mortgage provider.”
UK Finance said it will work closely with the FCA and active lenders to see how it can help customers of inactive and unregulated lenders switch to better deals.
If you’re unsure whether you can remortgage to a new deal, or you don’t know which mortgage to choose, a mortgage broker can do the research on your behalf to help you find the best possible deal.
Bear in mind that even if you are currently with an inactive lender, it is still worth seeking expert advice on the options available to you.
Lenders promise to help ‘mortgage prisoners’