In October 2019, mortgage affordability rules were reformed by the Financial Conduct Authority (FCA) to enable mortgage lenders to help mortgage prisoners, by allowing them access to cheaper home loans.
However, nine months on, it has emerged that over 170,000 homeowners are still trapped in a high interest mortgage. In fact, not a single lender has helped the mortgage prisoners access a cheaper loan!
These homeowners are paying mortgage rates far in excess of the modern cheaper deals to which most of us are accustomed but lenders hid behind affordability rules in order to prevent their victims from changing their deals. Some of those who were unable to switch mortgage deal were too old to remortgage, while others had mortgage loans that were too high against the value of their home.
An all-party parliamentary group of MPs has now called on the FCA and Competition and Markets Authority (CMA) to undertake a joint consultation that would cap the standard variable rate of mortgages.
The group’s letter said that mortgage prisoners typically paid two and a half times more than the most competitive mortgage rates available. It read: “Mortgage prisoners are being exploited by both fully regulated lenders and unregulated vulture funds by being held on high standard variable rates. We believe that the only way mortgage prisoners will see the vital improvements they need within an acceptable timescale will be for the CMA and the FCA to conduct a joint consultation and introduce a cap on standard variable rates.”
Ask for advice from a Chartered Surveyor when you buy property in England or Wales. A Property Surveying Chartered Surveyor will work on your behalf to provide you with a building survey and valuation to ensure that the property you buy doesn’t become a financial burden in the years to come.