You are here: Home - Mortgages - Remortgage - News -

Lenders pledge to switch mortgage prisoners to cheaper deals

0
Written by:
01/08/2018
Lenders have agreed to help borrowers who are stuck paying repayments at Standard Variable Rates (SVR) because they don’t pass stricter affordability rules for cheaper deals, which came into force after they first had a mortgage.

So-called mortgage prisoners will be able to switch to better offers from their existing lender, under the new industry common standards, which have been adopted by 59 providers representing more than 90% of the residential mortgage market.

Lenders will write to qualifying borrowers by the end of 2018, giving them the opportunity to move to a new product, should they wish.

The standards apply to first-charge customers of an active lender on a reversion rate on a like-for-like mortgage.

Borrowers must also be up to date on repayments to qualify, have a minimum remaining term of two years and have a minimum outstanding loan amount of £10,000.The common standards are the outcome of joint efforts from UK Finance, the Building Societies Association and the Intermediary Mortgage Lenders Association (IMLA).

It comes after the Financial Conduct Authority (FCA) raised concerns about mortgage prisoners in its interim report Mortgage Market Study.

Paul Broadhead, head of mortgage and housing policy at the Building Societies Association (BSA) said: “By signing up to this voluntary agreement lenders will ensure that existing borrowers are not disadvantaged by the changes to mortgage regulation since the financial crisis

 The agreement formalises the actions that many societies have been taking and provides clarity and confidence for all affected borrowers.”

Jackie Bennett, director of mortgages at UK Finance, said the trade body will be “working closely with the FCA and active lenders to see what might be possible for customers of inactive and unregulated lenders.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Unfamiliar banks woo savers with top rates…is your money safe?

If you’ve been keeping an eye on the savings best buy tables, you’ll have noticed some unfamiliar names lu...

What the base rate rise means for you

The Bank of England has raised the base rate by 0.25% to 0.5% – following on from the increase from 0.1% to ...

How to get help with your energy bills

The rise in the energy price cap from April will mean millions of households will pay hundreds of pounds a yea...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week