Barriers removed for some mortgage prisoners - but Martin says it will only 'unchain a tiny fraction

[BThe financial regulator has removed some barriers that stop mortgage customers from finding a cheaper deal - though many will still be left trapped[/B]...
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'Barriers removed for some mortgage prisoners - but Martin says it will only 'unchain a tiny fraction''
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  • kingstreet
    kingstreet Posts: 38,788 Forumite
    First Anniversary Name Dropper Photogenic First Post
    Back to the FSA transitional arrangements from October 2012 then?

    Just the seven years wasted.
    What if I have a mortgage but can’t meet the new criteria?

    The FSA has introduced “transitional” arrangements to help existing creditworthy borrowers that might not be able to move home or refinance as a result of these new rules. These changes come into effect immediately.

    Lenders will be allowed to waive the new affordability rules for existing borrowers that have met repayments for the last 12 months and have not fallen into arrears.

    The transitional arrangements only apply to borrowers who are seeking to borrow the same amount or less, not those who want to borrow more. These borrowers will be able to apply for a new loan through either their existing mortgage lender or a new bank.

    The FSA said: “Lenders will, with immediate effect, be prevented from treating these customers less favourably than other customers.”

    However, these transitional rules do not “compel” a bank to lend to an existing borrower. The FSA states that it ultimately remains a commercial decision for the lender.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
  • Reaper
    Reaper Posts: 7,285 Forumite
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    Mortgage prisoners are victims of irresponsible pre-crisis lending. As a result of the banks' reckless behaviour, they were often given mortgages which were too large – sometimes up to 125% of their income.
    True, but it's not only the fault of the banks. Customers were equally to blame for asking to borrow excessive amounts, often interest-only ones with no plan how to pay it off.
  • Mortgage_Adviser
    So reading this, it is not gong to help the mortgage prisoners but also many people who's income has gone down since they got the initial mortgage or their other circumstances have changes (Eg. had kids and now have chilcare costs).

    I would imagine that there are loads of people like this not a mere several thousand quoited in the article.
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