“UK watchdog intervenes to release mortgage ‘prisoners’.” – Rueuters
The FCA (the financial regulator) have said they will ease affordability checks by loan providers when remortgaging to a cheaper deal.
What does this mean?
The result of this means “mortgage prisoners” who got trapped on higher rates when the affordability checks where tightened, may soon be able to change to cheaper rates.
Who are the Mortgage ‘prisoners’?
Effectively they could afford mortgages on older more relaxed rules. When the rules changed to have stricter criteria, they no longer qualified for new mortgages. This meant they remained stuck on a higher variable rate with the original provider with no option to change.
How will it work?
The changes to allow the mortgage ‘prisoners; to switch will be subject through a mortgage “test” to allow them to change from the lower to higher rate. This test is currently being worked on by the regulator and the mortgage industry.
When will it happen?
No exact time-frames have been given yet to us, but this is the strongest indication yet that changes for the mortgage ‘prisoners’ is coming.
In conclusion, this is good news for mortgage prisoners, but they will still need to wait until they are fully ‘released’.
You can read more from Reuters.
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M.S. Sykes
Business Development and Relationship Manager
Joined 1st Financial Group in early 2018 and has previously worked in business succession and financial planning in Australasia. He is responsible for the online marketing, creation of marketing collateral and building strong relationships with stakeholders. In his spare time he enjoys long walks, studying finance, travelling and the gym.
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