Customers wanting to port their existing mortgages have been met with resistance from some lenders giving rise to complaints which have been escalated to FOS.
In its newsletter, the Ombudsman said where lenders were using inflexible processes and ‘box ticking’ the impact on the borrower was an unfair assessment of their application.
One complaint received by FOS was about a lender refusing to port a customer’s mortgage because the loan was four and a half times her salary, despite being told when she took out the original loan that porting would be possible.
The lender said it was concerned over the affordability of the mortgage, despite the terms of the ported mortgage being the same. It said it would not be able to consider the new loan without completing a full affordability assessment which it did not think she would pass.
In its response, FOS told the lender it should have considered a manual assessment of the borrowers’ circumstances using the transitional rules provided by the MMR which allow lenders to take a more flexible approach to underwriting if the borrower is increasing their loan size.
FOS sounded a warning to lenders that while their business’s overall lending criteria was a matter for them, the new rules did not mean that lenders should not consider customers’ individual circumstances when making lending decisions.