Residential Property Experts Say Move May Have Positive Impact On Housing Market
The FCA has announced plans to help so-called ‘mortgage prisoners’ by removing barriers to those stuck in high-interest mortgage repayments.
The new rules will allow lenders to use a different set of criteria to determine affordability, including being up-to-date with payments and whether or not someone is looking to move house. The updates have come into immediate effect following a consultation on the FCA’s existing policies earlier this year.
Those stuck in their mortgages will also be able to borrow more money from lenders to fund any advice fees taken out, in order to ensure they can change to a better policy with the correct advice without having to pay upfront for it.
A ‘mortgage prisoner’ is someone who is unable to switch mortgage even if they are up-to-date with the mortgage repayments. It is estimated 120,000 mortgage prisoners were trapped by unauthorised lenders, and a further 20,000 by inactive firms.
Residential property experts at leading national law firm Irwin Mitchell say the announcement may have a long-lasting effect on the housing market, opening up new opportunities for buyers and sellers alike.
Expert Opinion“Any changes are welcome to ensure consumers are not tied into products with high interest rates, leaving some completely unable to move house for years.
“This move from the FCA may even have a positive impact of the market as those who felt tied down will have more freedom to sell their property and ultimately move quicker in the long term.
“However while this is a positive step, like all property issues this is not a ‘one-size fits all’ and some home-owners may still not be able to move or remortgage if they do not meet the lender’s criteria, or for example, if they are in negative equity.” Helen Hutchison - Partner & Chartered Legal Executive