We want to hear from mortgage intermediaries who will work with mortgage prisoners to help them identify and move to an active lender where this is possible, or signpost them to additional support such as debt advice.
Our research[1], published in January 2020, showed that around 170,000 borrowers, with mortgages in closed books or owned by unregulated entities, were up-to-date with payments and would be eligible to switch mortgages because of our new rules[2].
These rules allow lenders to assess affordability based on a borrower’s track record of making mortgage payments.
Lenders may also offer other forms of flexibility that could help these borrowers remortgage. We hope to see as many lenders as possible provide opportunities to switch mortgage. We previously estimated[1] that around 14,000 borrowers should be both likely to meet firms’ commercial lending criteria and stand to make a meaningful saving.
Mortgage intermediaries have a key role to play in supporting the customer journey, from borrowers first learning of the option to switch, to finally being able to apply for a new mortgage.
Expected customer journey
Mortgage administrators are required to contact eligible customers by 1 December 2020. Typically, this will involve sending out letters that encourage customers to seek more information from the Money Advice Service[3] provided by the Money and Pensions Service.
Using information that is to be published on the Money Advice Service website, these customers will be able to assess any options available to them.
Customers who may be able to remortgage will then be able to access a list of mortgage intermediaries who will work with them and provide the support that they may need.
This list is aimed at helping customers find an intermediary and is not restrictive. Customers can, of course, approach mortgage intermediaries not on this list.
The list will also allow lenders to see which intermediaries need to be kept up-to-date with any bespoke offerings for mortgage prisoners and any changes to their criteria or underwriting.
Who can apply to be on the list of intermediaries?
Intermediaries who wish to apply must:
- be able to access mortgage options that represent the whole of the market
- be able to advise on later life options or have a relevant referral route (as outlined below)
- be able to advise on debt consolidation or have a relevant referral route (as outlined below)
- not charge a fee until an application is submitted to a lender (the fee may be added to the loan)
- collect and share with us relevant data on the support they have provided
Where firms have a relevant referral route, this must be to another intermediary. This second intermediary must:
- be able to access mortgage options that represent the whole of the later life or debt consolidation markets
- not charge a fee until an application is submitted to a lender (the fee may be added to the loan)
- collect relevant data on the support they have provided, in conjunction with the original intermediary
The data collected by intermediaries will help us to monitor outcomes for mortgage prisoners. We are finalising the details needed but it is likely, as a minimum, to cover:
- number of inbound calls from mortgage prisoners who have received communications about the modified affordability assessment from their administrator
- number of mortgage prisoner cases where fact find is completed
- number of applications submitted to lenders on behalf of mortgage prisoners
- number of mortgage prisoner applications that subsequently complete
- number of mortgage prisoners signposted to other solutions, which may include debt advice
The above criteria were developed with industry representatives. They will be kept under review, and we are happy to consider any comments on them.
Next steps
Interested intermediaries are asked to submit an expression of interest confirming that they meet the 5 criteria. This should have been sent by 6 August 2020.
Intermediaries will be notified by 11 August 2020 that they will appear on the alphabetical list of mortgage intermediaries held on the Money Advice Service website.
Once the list has been published, if intermediaries wish to be removed from it or to amend their details they can do by using the same email address
[email protected].
If interested intermediaries want to submit an expression of interest after 6 August 2020, they can do so at any time by contacting
[email protected].
If intermediaries do not meet the above 5 criteria but would still like to be included in the list, they can contact us via [email protected] to discuss this further.
What you need to know before submitting an expression of interest
- Expressions of interest can be accepted from directly authorised firms and the authorised principal firm of appointed representative networks. Appointed representatives should not apply but can approach their principal firm if they want to be part of any expression of interest it makes.
- Networks can apply on behalf of all their appointed representatives or may choose to limit the expression of interest to certain appointed representatives only.
- Networks can specify how their contact details appear on the list, ie as one central contact point for consumers or with contacts given for some or all their appointed representatives.
- All expressions of interest should be made in the name of a person with the authority to commit the firm or network to support this process.
- If there are parts of the country that the intermediary does not serve these should be disclosed as part of the expression of interest.
Switching options that may be available for mortgage prisoners
Mortgage lenders are considering various switching options for mortgage prisoners, such as:
- products that use the new modified affordability assessment
- existing products with relaxed underwriting criteria, such as turning off the additional stress test for pound-for-pound remortgaging
- later life lending options for older interest-only customers, including equity release, retirement interest-only mortgages, and mortgages into older age
- interest-only remortgaging with a repayment strategy, including sale of property where viable
- part capital and part interest-only mortgages or repayment mortgages for interest-only customers
- debt consolidation