John Glen MP, the Economic Secretary to the Treasury, has written a letter outlining the importance of collaboration to support mortgage prisoners.
In a letter addressed to Stephen Jones, the chief executive of UK Finance, Glen outlines how eligible borrowers should have the opportunity to access cheaper deals with new lenders.
Glen details recent research by the FCA which showed around 170,000 of these borrowers are eligible to switch under new FCA rules, of which there are around 14,000 who are up to date with their payments.
Glen writes: “Given the complexity in resolving issues around mortgage prisoners, it is important to closely monitor the impact of the recent rule changes, including the extend and pace of action by your members.
“I am open to considering an extension to the regulatory perimeter where the benefits to consumers and markets can be demonstrated, however it is important that we do not raise false hope for these customer by pursuing a change that does not end up helping them.”
Glen furthered that he looked forward to collaborating with the industry to “support borrowers whose mortgages are in closed mortgage books or owned by firms that are not regulated by the FCA”.
He concluded that despite FCA rule changes lifting the “regulatory barriers… I now expect lenders to take the lead in making a real difference to this group of borrowers”.
Gemma Harle, managing director of Quilter’s mortgage network, said of the letter:” The door to many lenders has been closed for many of those who took out a mortgage when the criteria was more straightforward.
“And the consequences can be substantial.
“The letter from John Glen MP today is a sign that the Treasury has issued a three line whip to the lending community to offer mortgages to mortgage prisoners.
“The FCA introduced new rules around mortgage affordability to help tens of thousands of these customers but this still requires the lenders to actually participate.
“This also applies pressure on intermediaries to offer advice to these customers, an element which is crucial.
“Under the FCA rules a customer is deemed as affordable if the new monthly payment is less than they are currently paying.
“However, when an adviser first speaks to a customer and confirms income and outgoings as part of the fact find it may look unaffordable and so it is up to the adviser to work with the client and the lender to ensure the client is getting the best mortgage possible.”