FCA proposes payment delays for mortgage prisoners

Published 29th July 2020 by Money Matters Direct

The financial regulator is set to introduce new rules to help mortgage prisoners struggling in the aftermath of the coronavirus pandemic, including delaying the repayment on maturing interest-only mortgages.

This measure would apply if borrowers, including mortgage prisoners, were currently up to date with repayments but had been affected by the adverse economic conditions caused by the coronavirus crisis.

The City watchdog also proposed easing the rules for borrowers switching lenders within the same financial group as their current lender, making it easier for consumers in closed mortgage books – those which are closed to new customers – to switch to a new deal.

The new rule would see firms able to treat intra-group switching from a closed book in their group in the same way as internal switching, which the FCA said should not require “significant systems changes”.

So-called mortgage prisoners are predominately borrowers who took out a mortgage before the financial crisis but were then blocked from switching due to stricter lending rules, or because their loan was sold to an inactive lender.

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Source: FT Advisor



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