It is estimated that about 140,000 homeowners are trapped on high interest-rate home loans with unregulated or inactive firms, and are unable to switch to a cheaper deal. The FCA is considering a change to its affordability checks which could therefore allow these home owners to switch to deals that are easier to pay.
Currently, many are stuck on high default rates, as a result of an FCA requirement – introduced in 2014 – for mortgage holders to meet strict affordability criteria when they apply for a new fixed deal. FCA chief executive Andrew Bailey said the planned changes would apply only to those in this situation who are not seeking to borrow more on their mortgage, but just want to get the cost down.
At the end of the day though banks and building societies would still need to agree to take on these customers.
Martin Lewis, founder of Money Saving Expert, said: “Finally, a welcome and sensible move. For over four years we’ve been saying that it’s ludicrous that people are failing affordability tests because they’re absurdly told they cannot afford a cheaper deal than the one they’re already on.”