You are here: Home - News -

Brexit preventing mortgage prisoner help: Bailey

by:
  • 01/11/2017
  • 0
Brexit preventing mortgage prisoner help: Bailey
The Brexit process is serving as a barrier to providing extra help for mortgage prisoners, according to the chief executive of the Financial Conduct Authority.

Speaking before the Treasury Select Committee, Andrew Bailey said that the “bonkers” rules of the European Union’s (EU) Mortgage Credit Directive prevent some borrowers from moving to a cheaper deal at a different lender.

Around one million borrowers are believed to be mortgage prisoners. Last year Robert Sinclair, chief executive of the Association of Mortgage Intermediaries – which had been lobbying for more help for such borrowers – said that action may only materialise when an interest rate rise takes place.

“Let’s say you’ve got a mortgage today and you want to refinance it at a lower cost. You can refinance it in a firm and escape the traps of the EU Mortgage Credit Directive,” explained Bailey.

“If you go to another lender you have to have an affordability assessment and the interpretation of the directive is that if you fail the test for the new mortgage you can’t move.”

Bailey described this as “bonkers” as “if you fail the new one then by definition you must be failing the current one, and the new one must be cheaper than the current one because why else would you be going there?”

While the Treasury and the regulator felt they had been making progress on getting this changed, the Brexit vote had undermined that, Bailey said, adding: “It is very difficult in the current world to run a UK-specific argument in Europe.”

There are 0 Comment(s)

Comments are closed.

You may also be interested in

Business Skills

In this section, we offer short ‘how to’ guides on harder to crack areas of business. From social media, to regulation or niche product areas, we cover it all.

Profiles

Our journalists interview key industry entrepreneurs, strategists and commentators for day-to-day market insight and a strategic view of where the industry is heading. We offer lessons for success and explore the opportunities for your business

Success in Practice

Here, we share case studies fleshing out best practice to help you decide what could work for your business. Take a look at how others approached complex tasks like launching a new mortgage lender, advising on a new product area or deciding to specialise in another. Learn from others mistakes and triumphs.

Marketwatch

Each week, we ask top mortgage and property commentators with a unique perspective to examine a key news headline, market move or regulatory or political issue.

Poll

Vote in our weekly poll here. It’s your chance to tell us what you think and be heard on the top news stories of the week. Review our archive to find out what your industry really thinks and all our coverage of the results.

Top Comments

Be part of the conversation on Mortgage Solutions. We want to hear from you. We have a tool called Disqus to tell us which stories get the most comments each week. Every Friday, the team picks the most thoughtful or opinionated contributions from our readers to enjoy again. Don’t forget to share your favourite stories from the site on social media to keep the conversation going.

Read previous post:
House prices won’t be hurt by rate rise says Moody’s

Ratings agency Moody’s has suggested that the expected base rate rise this week will not adversely affect house prices in...

Close