The FCA launches consultation to help mortgage prisoners switch to a cheaper mortgage

The FCA introduced new rules in October 2019 to make it easier for mortgage prisoners to take out a more affordable mortgage with a new lender. However, there has been limited take up of the new rules by lenders (which are optional for them). The problem has been exacerbated by Covid-19, which has meant that lenders’ focus has been elsewhere.  

In response, the FCA are proposing further rule changes to make it easier for borrowers with inactive lenders to switch to a new mortgage deal with a lender which sits within the same group of companies as their existing lender. Examples of this sort of relationship amongst our client group include The Mortgage Business (or TMB), which is part of Lloyds Banking Group, and Mortgage Agency Services Number Five, which is a subsidiary of The Co-operative Bank. 

You can read about the consultation and how to respond to it by visiting the FCA website here. The deadline for submissions is 8 September 2020.

Although we are grateful for any support the FCA provides to borrowers who find themselves in this difficult position, the proposed changes only have the potential to benefit a limited number of mortgage prisoners. The majority of our clients are with inactive lenders such as NRAM and Landmark Mortgages which do not have a lender in the same group which offers competitive mortgage interest rates. These borrowers would not be able to take advantage of the proposed changes and will, in all likelihood, remain trapped paying high interest rates. 

You can find out more about what we are doing to help mortgage prisoners by visiting our campaign website here