Following the Financial Conduct Authority's (FCA) Mortgage Market Study, an industry voluntary agreement was enacted to help borrowers on reversion rates who are up to date with payments but don't meet the affordability criteria required to switch to a new deal. This means that participating lenders will offer eligible borrowers the ability to switch to an alternative product.
The Government has also undertaken significant work to understand the circumstances of borrowers whose mortgages are held by inactive firms (which are not able to offer alternative products) and don’t meet the affordability requirements or risk appetite to switch to a new lender. The Government has worked with the FCA to create additional options for these borrowers, including through the introduction of a Modified Affordability Assessment which allows mortgage lenders to waive the normal affordability checks for borrowers with inactive firms who meet certain criteria, such as not wishing to borrow more.
The FCA is reviewing its data to provide further detail on the characteristics of borrowers who have mortgages with inactive firms and are unable to switch, despite being up to date with payments. The FCA is also reviewing the effect of its interventions to remove regulatory barriers to switching and will report on this by the end of November. The Treasury will use the results of this review to establish whether there are any further practical and proportionate solutions that can be found for affected borrowers.