Mortgage prisoners - borrowers unable to switch lenders despite being up-to-date with payments - may have an escape route in sight thanks to the Financial Conduct Authority.
Some 150,000 homeowners are thought to be obliged to stick with high interest-rate home loans with unregulated or inactive firms thanks to FCA rules on affordability instituted five years ago.
The Financial Conduct Authority now wants to relax such checks for these ‘prisoner’ customers.
The proposals apply only to those who are not seeking to borrow more on their mortgage but just want to pay the most competitive - that is, lowest - rate.
Banks and building societies would still need to agree to take on these customers.
In the final report of its Mortgages Market Study the FCA launches a consultation on new lending rules forms part of a package of remedies designed to help the market work better.
It also suggests lenders using more innovative tools to help customers more easily identify what mortgages they qualify for, to extend the advice services given to borrowers, and to help mortgage intermediaries to help customers make a more informed choice of broker.
Christopher Woolard, the FCA’s executive director of strategy and competition, says: “The market is working well for many with high levels of customer engagement and competition. The package of remedies we are taking forward will benefit consumers by encouraging innovation and making it easier for them to find the right mortgage.”
He adds: “We are particularly concerned about consumers – who are commonly referred to as mortgage prisoners - who are currently unable to switch. That is why we are acting now to help remove potential barriers in our rules. These changes should make it easier for consumers to get a more affordable mortgage.”