Bob's Blog

Helping mortgage prisoners

04 Nov 2019

Despite some considerable movement when it comes to finding solutions for the UK’s ‘mortgage prisoners’, and even with the recent removal of potential barriers for eligible borrowers announced by the FCA, it appears that we are still likely to have a situation where thousands of borrowers are unable to move away from more expensive SVR rates, regardless of their current financial situation and payment history.

While a small number of prisoners might be helped by the latest change to the affordability rules, we shouldn’t forget that this is an optional change for lenders and many of the larger operators may figure that, as Ray Boulger recently pointed out, the system changes do not warrant the small amount of business they are likely to conduct.

It’s interesting also that the UK Mortgage Prisoners campaign group, while thanking the FCA for the changes, said they didn’t go far enough and it’s their understanding that only a very small number of current borrowers would be helped onto a more competitive rate by this.

In a world in which there is also some debate around active lenders selling mortgage books to inactive organisations, and the potential for a new generation of mortgage prisoners to be created by such measures, we still appear to be someway away from a credible solution for all those impacted.

I can’t however be the only one to think that there still exists the potential for a wider solution, particularly as Ray also suggested, from the smaller lenders who operate a manual underwriting policy – via advisers – undertaking a review of these prisoner cases and potentially offering them a way out of their current predicament.

Once again, it may well need further education and sign-posting in terms of providing these borrowers with an advice avenue to explore, which advisers can then push forward, but with many of these individuals having been in the same predicament for almost a decade, we surely have to get a grip and provide a more structured solution for them?

I don’t deny that there is a willingness from both the regulator and certain lenders in order to do this, but currently there appears to be too much reliance on the ‘goodwill’ of lenders to change their systems and to meet the challenge, rather than a mandatory approach which might get the job done once and for all.

Next steps are crucial but if we as an industry can identify those impacted, and can provide the right advice, then hopefully lenders will be able to take up the challenge and put right the wrongs that these borrowers have had to endure for far too long.

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