Mortgages: Coronavirus

Treasury written question – answered on 21st July 2020.

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Photo of Kate Osborne Kate Osborne Labour, Jarrow

To ask the Chancellor of the Exchequer, what recent discussions he has had with representatives of the mortgage lending sector on easing the financial pressures faced by people paying double interest on their mortgage during covid-19 outbreak; and what plans he has to help those people switch to new mortgage lenders.

Photo of Kate Osborne Kate Osborne Labour, Jarrow

To ask the Chancellor of the Exchequer, what assessment he has made of the effect of the modified affordability assessment on the number of mortgage prisoners unable to access new mortgages.

Photo of Kate Osborne Kate Osborne Labour, Jarrow

To ask the Chancellor of the Exchequer, what recent discussions he has had with representatives of the mortgage lending sector on tackling the situation affecting mortgage prisoners.

Photo of John Glen John Glen Minister of State (Treasury) (City), The Economic Secretary to the Treasury

The Government remains committed to supporting these borrowers, which is why the Government and the FCA have taken action to remove the regulatory barriers that previously prevented switching.

Lenders are currently making the necessary adjustments and system changes to enable them to use the modified affordability assessment for borrowers looking to re-mortgage. Due to the operational constraints caused by Covid-19 there was a temporary retraction of mortgage products in the market, therefore it would not have been of benefit to contact borrowers when meaningful options were not available to them. We expect lenders to start offering these borrowers switching options by the end of the year.

Earlier this year I wrote to UK Finance outlining my expectation that as many of its members as possible should move quickly to offer new deals to borrowers that are eligible to switch under the new FCA rules. You can read the letter here:

https://www.gov.uk/government/publications/a-letter-from-john-glen-to-stephen-jones-on-mortgage-prisoners.

The Government continues to work with the mortgage lending sector to ensure support is available for consumers.

The FCA also recently noted that firms should be reviewing their variable rates to ensure they adhere to regulations regarding the fair treatment of consumers. The full statement can be found here: https://www.fca.org.uk/news/statements/statement-mortgage-prisoners

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