Tens of thousands of mortgage prisoners could be freed as FCA looks to relax lending rules 26 March 2019 at 9:46AM in Mortgages & endowments 24 replies 2.6K views

Former_MSE_Naomi

Tens of thousands of mortgage prisoners are now one step closer to being freed, after the financial regulator began consulting on relaxing mortgage affordability rules, in an important step forward for MoneySavingExpert.com's long-running campaign...

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'Tens of thousands of mortgage prisoners could be freed as FCA looks to relax lending rules'

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boatman

Does that then mean they won't actually check your pay?
If they just check that you are not in arrears and it's a lower percentage, how do they know you will be able to afford it next month? Surely they need to do a few more checks?
Providing there is a good chunk of equity in the house, then it may not matter that you lose your job a month after getting the go ahead..

vacheron

I think it means the lenders are not obliged to follow the relevant FCA rules in these circumstances.

However I'm sure they will perform their own internal due diligence as I doubt that they are going to gamble more foolishly with their own money just because they can. (He says casually disregarding 2008) :P

In fact, as many applicants may be experiencing financial hardship, their internal checks may be even more stringent than usual.

phillw

boatman wrote: »

If they just check that you are not in arrears and it's a lower percentage, how do they know you will be able to afford it next month? Surely they need to do a few more checks?

What difference does it make? This is for people who already have a mortgage, if you can't afford your new cheaper deal next month then you surely won't afford your current deal. IMO it shouldn't even matter if you are in arrears.

If they can offer you a mortgage at a cheaper rate than you are already paying, then they should.

Brock_and_Roll

I have read the details several times and am still scratching my head...

Clearly the FCA is not "forcing", and cannot force lenders to lend to someone or dictate the rate.

So ceteris paribus surely we are talking about a relatively small number of "prisoners" who might find a lender that otherwise would have lent to them if it were not for the FCA rules?

AnotherJoe

Is this not more about lenders who wont let existing borrowers go onto retention deals with lower rates on the ludicrous grounds they might not be able to afford it even though their current deals are more expensive?

Typhoon2000

AnotherJoe wrote: »

Is this not more about lenders who wont let existing borrowers go onto retention deals with lower rates on the ludicrous grounds they might not be able to afford it even though their current deals are more expensive?

Doesn’t appear to be.
The article says of the 150000 mortgage prisoners, 120000 are with unregulated lenders that the FCA has no power over 20000 are with lenders than no longer offer new mortgages.

jubilee14

I am very excited/hopeful about this. Have been stuck with Landmark (Was NRAM) for 12+ years having got myself into debt and unable to change. Now hopefully i will be able to re-mortgage at last and drop down from 5.2% interest. Let us know when banks start providing feedback on this decision!

Thrugelmir

Brock_and_Roll wrote: »

I have read the details several times and am still scratching my head...

Clearly the FCA is not "forcing", and cannot force lenders to lend to someone or dictate the rate.

So ceteris paribus surely we are talking about a relatively small number of "prisoners" who might find a lender that otherwise would have lent to them if it were not for the FCA rules?

Might be that a number of lenders target this segment of the market with specific products. Why people are unable to remortgage may well be a deciding factor.

boatman

Thrugelmir wrote: »

Why people are unable to remortgage may well be a deciding factor.

Change of circumstances is the most probable reason, be it kids, health, redundancy..

csgohan4

boatman wrote: »

Change of circumstances is the most probable reason, be it kids, health, redundancy..

Could also be those who self declared and on IO who are struggling because they are spending beyond their means