A new mortgage prisoner affordability calculator has been installed on the bank’s website for brokers who have been approved by the Financial Conduct Authority (FCA) to advise trapped borrowers.
In a statement on its website NatWest said: “…we’re proud to be helping our customers and communities by supporting mortgage prisoners by providing a more suitable and proportionate affordability assessment for these customers from the 30 September 2020.”
If the borrower passes the revised affordability check, they will be eligible for deals within the bank’s standard remortgage range.
The FCA has estimated there are around 140,000 borrowers unable to switch to a better deal despite being up to date with their payments.
To allow banks to help borrowers trapped on the mortgage books of inactive lenders, paying higher than average interest rates, the FCA changed its rules to allow lenders to assess the borrower’s affordability based on their history of maintaining their mortgage.
This is because many mortgage prisoners were issued mortgages under pre-credit crisis lending rules which applied less stringent income and outgoing checks.
Only brokers who are on the FCA’s approved list of firms permitted to carry out the extra steps in the mortgage prisoner assessment process are allowed to submit applications to NatWest.
Eligibility letter fears
Borrowers must be in receipt of a letter from their current lender confirming their mortgage prisoner status to be eligible to apply.
However campaigner Rachel Neale of UK Mortgage Prisoners Action Group fears tens of thousands of mortgage prisoners will not receive letters from their lenders confirming their status.
She said: “Given our experience of the service provided by inactive lenders to date, we have no trust that they will contact borrowers because they would prefer to keep us trapped and paying high repayments each month.
“Prisoners should be able to provide their mortgage statements as proof of their status.”
A NatWest spokesperson said: “In line with our focus on being a purpose led organisation we are committed to providing appropriate support for individuals and the wider market.”