The Financial Conduct Authority is exploring ways to provide ‘additional flexibility’ to help mortgage prisoners.
Christopher Woolard, the regulator’s executive director of strategy and competition, warned delegates at UK Finance’s annual mortgage conference that ‘we are not out of the woods’ when it comes to helping those in need.
He estimated that there are 20,000 customers with authorised lenders that now have closed books and 120,000 customers with unauthorised firms who could benefit from switching.
Woolard said: “How can we help these consumers? We need to think about this as a matter of urgency.
“It’s a complex issue and it’s going to require some sustained creativity from both us as regulators but also from lenders.
“We are considering other ways in which we can provide some additional flexibility in line with the obligations that we have with affordability rules in place.”
He added that it can’t make sense to deny someone a cheaper deal where they can repay more of the mortgage.
Woolard warned that in 2027 and 2032 there is a greater risk of consumers having a shortfall when it comes to remortgaging, meaning more people are at risk of losing their homes.
He also sent out a warning to unregulated lenders with mortgage prisoners on their books.
He added: “If need be we will also discuss with government whether any change is needed to our own regulatory perimeter… to ensure that we can protect consumers whose mortgages were transferred into the unregulated sector.
“It simply isn’t an acceptable argument to hide behind the intricacies of our regulatory perimeter.”