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Ami calls for ‘mortgage prisoners’ to get 10% borrowing flexibility

The Association of Mortgage Intermediaries has backed a call for the FSA to reduce the impact of the mortgage market review on so-called “mortgage prisoners”.

Earlier this week, the Financial Services Consumer Panel called for the FSA to implement a new rule to protect borrowers who are left unable to exit their current mortgage due to factors such as high loan-to-value, negative equity or a tightening of criteria in the interest-only market.

The problem facing these borrowers has been put in the spotlight recently after Halifax, Co-operative Bank, Bank of Ireland, and Clydesdale and Yorkshire Banks increased their SVRs.

Ami is calling for the FSA to allow a degree of flexibility to allow lenders to move customers onto a new deal and suggests a 10 per cent tolerance on both the additional borrowing and the monthly cost of borrowing.

Ami director Robert Sinclair says: “The transitional arrangements introduced in the MMR proposals by the FSA should aim to reduce the impact on consumers who could otherwise become property and/or mortgage prisoners. 

“This is particularly the case for those who may have self-certified in the past, have good payment histories and have enjoyed the benefits of interest only loans.  It is important that the market continues to allow such existing customers to have some flexibility, without taking on significantly greater financial exposure.”

He adds the scale of the problem facing “mortgage prisoners” will only be exposed when the Bank of England increases base rate.

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. Spot on Robert this wider mortgage prisoner issue could dwarf the currently in fashion interest only one. Both are real, both neeed tackling, but existing borrowers interests must considered and protected, otherwise they will simply become scaepgoats in the future

  2. Don't dare to call yourselves advisers 5th April 2012 at 2:03 pm

    Maybe if you so called ‘mortgage advisers’ had done the job properly in the first place and not recomended interest only mortgages as a means to obtain unaffordable funding, the market would be in a very different place.

    You care not about your clients and the fact that they will not be able to repay their mortgages. You care only that you cannot remortgage them again and earn another fat fee for a totally inappropriate mortgage.

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