FCA: Lenders finally helping mortgage prisoners
Speaking at the Intermediary Mortgage Lenders Association annual mortgage debate Lynda Blackwell, mortgage sector specialist at the Financial Conduct Authority, said following some simplification of the process, firms were now starting to offer new deals to borrowers trapped on their existing mortgage.
She said: “Firms are increasingly using the transitional arrangements but there is a problem with the industrialisation of process at the banks.
“When the actually reviewed that and pulled the customers out and had a look at them, they were using the transitional rules but there was a process issue there.”
She also challenged the industry to widen its view on innovation.
“Why is it when we talk about innovation we only think about debt and borrowing?
“We should look more widely to innovate rather than just focusing on debt.”
Blackwell also said there was a clear need in the market to serve older borrowers better with perhaps a hybrid product that allowed people to pay down interest on the mortgage up to retirement and then convert to something akin to a lifetime mortgage.
She added: “There is a lot of work going on in the industry at the moment with both the Building Societies Association and the Council of Mortgage Lenders working to address this problem of lending into retirement.
“Mortgages were designed to be repaid over 25 years so you didn’t have a mortgage when you retired.
“For those with a lot of equity in their homes, there is the lifetime mortgage. There is nothing in between and that is what the industry’s looking at the moment and we are supportive of that.”