FCA action on interest-only mortgages is welcome but mortgage prisoners need a cap on rates
Responding to the FCA's Statement on Mortgage Prisoners and Consultation
Seema Malhotra MP, Co-Chair of the APPG on Mortgage Prisoners Said:
"The extension of the prohibition on repossession of interest-only mortgage customers who are making their monthly interest payment to 31 October 2021 is good news and will provide temporary relief to thousands of customers. Alongside this extension, the FCA needs to amend its guidance so that all interest-only customers are offered a full range of options at the end of their mortgage term."
"The APPG has in the past called for banks to be forced to apply streamlined affordability tests when allowing mortgage prisoners to switch to better deals offered by the same banking group. The proposal from the FCA to allow firms to use a streamlined approach when a mortgage prisoner is switching within a larger group is welcome but the only way in which it is going to help mortgage prisoners is to make it compulsory. It would be naive to think that large banks and building societies which have exploited mortgage prisoners for years by holding them in separate subsidiaries or closed mortgage books will willingly offer better deals."
"Unfortunately, what is glaringly missing here is any help for the tens of thousands who are caught with vulture funds, and who have no hope of accessing better deals with their existing provider unless the FCA intervenes to cap interest rates."