Swopping mortgage rate - keeping lender

kingstreet

kingstreet wrote: »

I wonder what happened to this;-
3.10

http://www.fca.org.uk/static/documents/policy-statements/fsa-ps12-16.pdf

Exactly the point I was referring to earlier.

As if by magic, the shopkeeper appeared;-

http://www.mortgagestrategy.co.uk/2010495.article?cmpid=msbreak_296860

The FCA has hit out at lenders failing to use the transitional arrangements it introduced under the Mortgage Market Review to waive affordability checks for existing borrowers and instead keeping them on more expensive SVRs.

Speaking at the Financial Services Expo in Manchester today, FCA mortgage and mutuals sector manager Lynda Blackwell told brokers that transitional provisions had been put in place under the MMR that did not require lenders to undertake an affordability assessment on product switches where no additional money is being borrowed.

The transitional arrangements apply when borrowers do not increase the mortgage amount and have a good payment history.

The original intention of the transitional arrangements was to help existing borrowers who had become unfairly trapped with their lender due to the fact that the MMR rules introduced after they had committed to a mortgage. Without the transitional arrangements many existing borrowers would potentially have been prevented from moving or transferring to a better deal.

But Blackwell says the FCA has heard of cases where borrowers are being refused the option of moving to a fixed rate on affordability grounds and then having to remain on the lender’s more expensive SVR.

She says: ”That is not what the MMR says. It is disappointing to see this happening because lenders have wanted flexibility with the transitional arrangements.

“In the future it would be really good to see lenders approaching this in the spirit intended and using the transitional provisions to help out those borrowers who need to move home, who want a better rate, but who find themselves trapped because of tighter criteria and stricter affordability checks.”

Leon_W

I hadn't seen that kings.


I have maintained for many years now that as long as you aren't borrowing any more than you owe already then there is no reason why a mortgage could not be ported to a new property without income checks. I get incensed by the stupidity of lenders making "criteria" or "rules" up on the hoof to make things overly difficult.


I think I read a thread on here today where someone was downsizing and paying off a lump sum from their existing mortgage but was rejected on "affordability" grounds. How ? If they've been happily paying the mortgage and have no credit issues how can a reduced mortgage amount now be unaffordable ?


Likewise, how is keeping customers on a higher SVR more affordable than them being able to take out a cheaper retention deal.
It can't get any sillier.

sturgeon62

"I think I read a thread on here today where someone was downsizing and paying off a lump sum from their existing mortgage but was rejected on "affordability" grounds. How ? If they've been happily paying the mortgage and have no credit issues how can a reduced mortgage amount now be unaffordable ? "

This is affecting us in a similar situation, we have been turned down on affordability tests as the current term takes us into my partners pension years (66 yr old retirement date) We now need to pay off a lump sum to reduce the term which will actually increase our current payments!

amnblog

Lynda Blackwell should have gone on to say that whilst the FCA does not require lenders to re-underwrite cases, Lenders will do what suits them within the law.

amnblog

sturgeon62 wrote: »

"I think I read a thread on here today where someone was downsizing and paying off a lump sum from their existing mortgage but was rejected on "affordability" grounds. How ? If they've been happily paying the mortgage and have no credit issues how can a reduced mortgage amount now be unaffordable ? "

This is affecting us in a similar situation, we have been turned down on affordability tests as the current term takes us into my partners pension years (66 yr old retirement date) We now need to pay off a lump sum to reduce the term which will actually increase our current payments!

Is 66 years your partners state retirement age? If 67 you could argue the point.

Leon_W

Treating Customers Fairly


Outcome 6: Consumers do not face unreasonable post-sale barriers imposed by firms to change product, switch provider, submit a claim or make a complaint.




Now, as it stands I see plenty of people being treated unfairly. You only have to read this board to see that the post sale barriers have been fortified with watchtowers and topped with barbed wire !

amnblog

TCF never was law was it?

Just 6 principles to beat us up and fine us with.

kingstreet

Wheatley has picked up on this now;-

http://www.mortgagestrategy.co.uk/2011558.article?cmpid=msbreak_364873

FCA chief executive Martin Wheatley says he is “disappointed” at the way lenders have responded to the mortgage market review, saying lenders have not approached the regulatory changes in the right spirit.

The Daily Mail reports that while Wheatley agrees it is reasonable for lenders to decide what level of risk they are prepared to take, some lenders have gone too far.

Wheatley says: “It shows some lenders are not approaching the rules in the spirit they were intended.

“Every firm has a responsibility to treat their customers fairly and we would expect them to put good customer outcomes at the heart of everything they do. Leaving customers on higher rate deals does not fit with either of those criteria.”

Since the new regulations were introduced on 26 April, lenders have been criticised for not using transitional rules that waive the new affordability checks for existing borrowers who wish to switch to a lower rate mortgage. As a result, thousands of borrowers have been stuck on lenders’ standard variable rates, which are often much higher than the original rate when the mortgage was taken out.