29 Jan Mortgage Prisoners
The Mortgage Market Study by the Financial Conduct Authority (FCA) estimated that around 140,000 borrowers were unable to switch to a better mortgage deal even though they were up-to-date with their payments. These eligible mortgage prisoners should have been sent a letter by 1 December 2020 by their current provider to encourage them to seek more information.
Mortgage Market Study Findings:
- Around 250,000 people are in closed mortgage books or have mortgages owned by firms that are not regulated.
- However, FCA research shows around 170,000 of these borrowers are up-to-date with payments and would be eligible to switch because of our new rules.
- Over half of the group that are eligible are paying interest of 3.5% or less. 39% are paying an interest rate of less than 3.0%.
- Of those eligible to switch, 40,000 have less than £50,000 to repay, many of whom have less than 10 years remaining on their mortgage.
- Both these sets of borrowers may find limited value in switching depending on the deals we find.
- Around 14,000 eligible mortgage prisoners should be both likely to meet commercial lending criteria and stand to make a meaningful saving.
The FCA changed the rules to allow lenders to assess affordability based on a borrower’s track record of making mortgage payments in 2009. They have said that mortgage intermediaries have a key role to play in supporting the customer journey, from borrowers first learning of the option to switch, to finally being able to apply for a new mortgage. Customers who may be able to remortgage will then be able to access a list of mortgage intermediaries who will work with them and provide the support that they may need.
If you’re considering remortgaging your property it’s very important to seek expert advice to suit your personal circumstances and financial wellbeing. Our mortgage professionals will trawl through the small print of a wide range of providers for you to recommend the best product to suit your requirements. If you would like to find out more, we offer an initial appointment at no cost or obligation to explore the options via a telephone call or video call such as Zoom or Skype.
Speaking to a professional mortgage adviser that works with many lenders is imperative. For advice on the right mortgage to suit your personal circumstances, please contact the team at Howard Mortgages on 01803 554455 or contact us here.
Your home may be repossessed if you do not keep up repayments on your mortgage.