Up to 10,000 so-called mortgage prisoners who are stuck on their existing deal could soon be rescued by lenders who have pledged to help them switch to new products.
As part of the commitment, 59 authorised lenders, who combined account for 93% of the UK's residential mortgage market, have agreed to help existing borrowers on reversion rates who are up-to-date with repayments but, because of stricter affordability criteria, are currently ineligible to move to an alternative product provided by their lender.
Mortgage providers will be identifying and contacting eligible customers before the end of 2018, although it should be noted that the promise applies only to customers of those lenders that are able to offer alternative products to their existing borrowers. Customers do not need to take any action and will not be obliged to switch if they do not wish to.
To qualify, borrowers will need to:
While the announcement is great news for those who qualify, the sad fact is that a further 140,000 mortgage prisoners – 20,000 of whom are customers with inactive lenders and 120,000 who are with unregulated mortgage owners – will remain stranded.
"We expect more lenders to participate in the coming months," said Jackie Bennett, director of mortgages at UK Finance. "Furthermore, we will be working closely with the FCA and active lenders to see what might be possible for customers of inactive and unregulated lenders.
"Participating lenders will be contacting qualifying homeowners so for now, customers don't need to do anything but wait to hear from their mortgage provider."
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