The West Brom launches support for mortgage prisoners
Last week the Society announced our plans for a new proposition specifically designed to make use of the new rules on affordability, that make it easier for mortgage prisoners to switch to a more affordable deal.
From today, we are implementing the new modified affordability assessment through a specific range of products. The range will initially include two products, one at 60% loan-to-value for interest only and the other limited to 75% loan-to-value for capital repayment applications, subject to tranche limits to manage demand and operational capacity.
Borrowers who believe they might be eligible under the new assessment can access the products initially through our direct mortgage advisors and intermediary partner Mortgage Force.
Speaking about the new products, West Brom Chief Executive, Jonathan Westhoff said: “Mortgage prisoners, or people trapped on their current mortgage product, have been a growing issue that has rightly received much greater focus as mortgage rates have continued their downward trend over the last decade. We know that some of these borrowers have been unable to access significantly better deals for many years, some since the financial crash in 2008, and the support lenders have now received from the regulator has paved the way for change.
“We recognise that this is just the beginning and there is a lot more work that needs to be done by both lenders and intermediary firms, to help those people who have been stuck on a mortgage product for a number of years already. The West Brom can only make a small difference, but we hope that we can at least start the process of helping by creating a more active market, supported by more affordable products.”
Mortgage prisoners are borrowers in closed mortgage books who, due to the stringent requirement on affordability tests introduced following the financial crash of 2008, have been unable to take advantage of lower cost mortgage options as their current lender offers no product alternatives to its standard variable rate. The FCA estimates that 250,000* UK mortgage holders can be classed as ‘mortgage prisoners’. Of this, approximately 14,000 have been assessed as potentially immediately eligible to switch products using the modified affordability assessment.
In order to qualify for the Society’s products, borrowers must first be able to evidence they are in a closed book or held by an inactive lender and be eligible under the FCA’s Modified Affordability Assessment rules, which require, as a minimum, existing mortgage payments to have been made for a period of 12 months and there to be no arrears position. If borrowers are uncertain of their position they should either contact their existing lender or administrator or go to the Money and Pensions Service’s portal to find out more information.
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