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For many years AMI has been challenging lenders, the regulator and government to look more carefully at the issues facing what we saw as a significant population of mortgage prisoners.  These were individuals who appeared to be able to meet their regular financial commitments, but who were prevented from moving to cheaper mortgage deals by the application of more stringent affordability and other tests brought in following the Mortgage Market Review and the European Mortgage Credit Directive.  Our members had been regularly telling us of some lenders refusing new cheaper deals even when no more money was being borrowed and their customer had an exemplary record.  Martin Lewis picked this up as a cause and we persuaded the FCA Mortgages Market Study team to look at the issue.

In the interim findings of the Study they found that there appeared to be some borrowers who existing lenders should be treating better.  UK Finance, the BSA and IMLA were quick to react and a voluntary solution was established for around ten thousand such consumer with active lenders.  They are to be commended for this.  The rest until now have been left in the “too difficult” box.  However, under pressure from the Treasury Select Committee, Andrew Bailey has now written to the Committee Chair to intimate that the FCA may now have found a magic solution to the problem.  They intend to consult later in the year on a rule change to deliver “a more proportionate affordability assessment”.  A relative not an absolute test which will look not at full income and expenditure, but whether the new mortgage costs are more affordable than the existing costs.

What we have been told was impossible since the Directive was enacted in 2016 and previously has magically disappeared.  It is wonderful that after all our efforts that a change is now in sight, but it is frustrating that yet again our regulator only appears to bow to political pressure, not the sensible challenges from those they regulate.  Also, as each month costs these consumers more than they need to pay, some urgency might be appropriate now that the magician has found his touch.  A dove in full flight rather than a dozy rabbit is needed.

Robert Sinclair
Jan 19

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