To offer protection to trapped borrowers the regulator created a set of transitional rules to allow lenders assessing borrowers with mortgages dated before 26 April to offer leniency when carrying their assessment of applicants’ circumstances.
Under the rules, lenders are given the flexibility to make their own decision about offering exceptions to the affordability and interest-only criteria put in place by the MMR for existing borrowers. These rules can be used to take on borrowers from other lenders.
But banks and building societies have been accused of ignoring transitional allowances for fear of a future backlash from the regulator.
The Ipswich’s new lending programme will see them consider transitional lending to borrowers from other lenders, on top of its previous position of supporting transitional lending solely to existing borrowers.
Paul Winter, chief executive of Ipswich Building Society, said: “It is possible to still give people a choice while retaining a diligent approach to lending.
“Speaking to the financial services sector, I would urge my peers at other lenders to think about making the mortgage market work more effectively for mortgage misfits by offering choices for those who fall outside the norm.”
It will consider applications where the borrower is not increasing their loan and their circumstances have not changed.
The society has labelled these customers ‘mortgage misfits’ and said the self-employed, self-builders and older generations fall into this bracket. It said that many of these borrowers have kept up-to-date with payments but don’t fit the requirements of the MMR so find themselves with limited options when choosing a new mortgage.
All residential mortgages products available from Ipswich Building Society can have transitional arrangements applied to them. Borrowers in England and Wales can apply to the programme directly or through a selected group of brokers.
