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

Lenders criticised as mortgage complaints spike

0
21/07/2015
Lenders have been criticised for applying rules brought about by the Mortgage Market Review (MMR) too rigidly leading to the unfair treatment of borrowers, according to the Financial Ombudsman Service (FOS).

Customers wanting to port their existing mortgage (transfer it to another property) have been met with resistance from some lenders giving rise to complaints which have been escalated to FOS.

In its latest newsletter, the Ombudsman said where lenders were using inflexible processes and ‘box ticking’, the impact on the borrower was an unfair assessment of their application.

<<How the new mortgage lending rules affect you>>

One complaint received by FOS was about a lender refusing to port a customer’s mortgage because the loan was four and a half times her salary, despite being told when she took out the original loan that porting would be possible.

The lender said it was concerned over the affordability of the mortgage, despite the terms of the ported mortgage being the same. It said it would not be able to consider the new loan without completing a full affordability assessment which it did not think she would pass.

In its response, FOS told the lender it should have considered a manual assessment of the borrowers’ circumstances using the transitional rules provided by the MMR which allow lenders to take a more flexible approach to underwriting if the borrower is increasing their loan size.

FOS sounded a warning to lenders that while their business’s overall lending criteria was a matter for them, the new rules did not mean that lenders should not consider customers’ individual circumstances when making lending decisions.

Tagged:

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