Quilter's Mortgage Network said today it has supported the FCA's call for mortgage intermediaries willing to help mortgage prisoners and stands ready to help mortgage prisoners' access more affordable mortgage options.
Members of the network have the right profile of expertise, including knowledge of equity release, to appropriately support this group and ensure they understand all their options.
A considerable number of people who took out a mortgage before the 2008 financial crisis and whose mortgage is now within a closed book or owned by an unregulated entity, cannot switch to a cheaper deal due to affordability rules introduced following the 2008 financial crisis and are trapped paying the standard variable rate.
This group should never have been put into this position and it is unthinkable they remain in it."
New rules introduced by the FCA in October allow lenders to assess affordability based on a borrower's track record of making mortgage payments, which should help around 170,000 borrowers accesses cheaper deals.
However, lenders have struggled to make the necessary changes and as they now have to deal with the fallout from covid-19 those challenges may be even more difficult. This makes it even more important to have a financial adviser who has knowledge of the market and options available.
Gemma Harle, managing director of Quilter Financial Planning said: "Covid-19 has had a dramatic impact on the nation's finances, and many will find themselves struggling to make ends meet in this challenging time. But for many mortgage holders who are trapped paying over the odds, the ramifications of the last crisis are still being felt as they are unable to switch to a better deal thanks to the affordability rules introduced in the wake of the 2008 crisis."
"What the rules are effectively saying is that these borrowers cannot afford to pay less each month. This is illogical, and Quilter is ready to support these customers throughout the entire journey, to help them find a better deal or guide them to other solutions and debt advice if necessary."
"But the elephant in the room remains. The FCA's new rules will only be effective if lenders are willing to apply the new assessment and offer a product for mortgage prisoners to allow them to switch. In the current economic environment, where many high-street banks have been forced to set aside considerable amounts of capital for impairment losses, it is unlikely they will be making the changes anytime soon."
"However, all is not lost for this group. In some instances, there may be scenarios that people think they are mortgage prisoners, when in fact there are other options available.
"This group should never have been put into this position and it is unthinkable they remain in it. We will do as much as we can to support people harmed, but lenders and the regulator need to work together to help as far as they possibly can and ensure this never happens again."
Gail Smyth, principle and founder of Charles Mac, a member of Quilter's network added: "This is an issue close to my heart having worked closely with groups campaigning on behalf of mortgage prisoners over the past few years. Time and time again we hear devastating stories of the financial and emotional impact of being a mortgage prisoner and it is not right that this is allowed to continue."
"Advisers are well placed to do the heavy lifting for mortgage prisoners and offer potential solutions."