Asked by: Dan Jarvis (Labour - Barnsley Central)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what steps he is taking to reduce the number of mortgage prisoners.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The government is committed to helping mortgage prisoners where they will see genuine benefit. This has included work with the Financial conduct Authority to implement rule changes to its mortgage lending rules, removing the regulatory barrier that prevented some customers, who otherwise may have been able to switch, from accessing new products. The new rules should allow customers to switch to an active lender as long as they meet the lenders’ risk appetite and meet certain criteria, such as not looking to borrow more and be up to date with payments. Inactive lenders have now started contacting borrowers who have been struggling to switch, setting out new options that may be available for them on the active market. A number of lenders have also come forward with products specifically for these borrowers.
In addition, the Money and Pensions Service (MaPS) launched online information and a dedicated phone service (accessible via MaPS’ main contact number) as a key source of information and advice for borrowers with inactive lenders, including signposting to specific brokers that will be able to help them look for a deal with an active lender.
Asked by: Patricia Gibson (Scottish National Party - North Ayrshire and Arran)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what plans he has to provide financial support or compensation to homeowners who are mortgage prisoners with Northern Rock Asset Management.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
We remain committed to supporting as many borrowers as possible with inactive lenders move to a cheaper deal. The government has worked with the FCA to implement rule changes to its mortgage lending rules, removing the regulatory barrier that prevented some customers, who otherwise may have been able to switch, from accessing new products. Inactive lenders have now started contacting borrowers who have been struggling to switch, setting out that options may be available for them on the active market. I will monitor the situation and hope to see even more options available over the coming months.
The FCA recently confirmed additional options to support borrowers, including making intragroup switching easier and extending the window in which interest-only borrowers coming to the end of their term can continue making interest payments, without paying down the capital. These modified rules came into force on 23 October 2020. More information can be found here: https://www.fca.org.uk/news/press-releases/fca-confirms-measures-support-closed-book-and-interest-only-part-and-part-mortgage-borrowers.
UK Asset Resolution (UKAR) – the owner of the Northern Rock Asset Management mortgage portfolio - has worked to help customers looking for a better deal with another lender by;
It is also worth noting that Norther Rock Asset Management’s Standard Variable Rate (SVR) has always been set in line with the SVRs of active lenders.
Asked by: Claire Hanna (Social Democratic & Labour Party - Belfast South)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the implications for his policies of the proposals made by the London School of Economics on mortgage prisoners, published 11 November 2020.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
We are grateful to London School of Economics (LSE) and Martin Lewis for their contribution to this conversation.
We remain committed to supporting these borrowers and are pleased that active lenders have started offering switching options specifically for mortgage prisoners taking advantage of the new flexibilities given to them by the FCA. We will monitor the impact of this in the coming months.
Asked by: Gill Furniss (Labour - Sheffield, Brightside and Hillsborough)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what steps he is taking to support mortgage prisoners.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The Government remains committed to supporting these borrowers and has worked with the FCA to implement rule changes to its mortgage lending rules, removing the regulatory barrier that prevented some customers, who otherwise may have been able to switch, from accessing new products. The new rules should allow customers to switch to an active lender as long as they meet the lenders’ risk appetite and meet certain criteria, such as not looking to borrow more. Lenders have now started contacting borrowers who have been struggling to switch with options specifically designed for them, and I hope to see even more options from active lenders over the coming months.
Some customers may not be eligible to access new mortgage products in line with the adapted affordability assessment. This is why the FCA recently confirmed additional options to support borrowers, including making intragroup switching easier and extending interest-only payments, recognising the impact of Covid-19 on borrowers. These modified rules came into force on 23 October 2020.
Moreover, on 14 September, the Money and Pensions Service (MaPS) launched online information and a dedicated phone service (accessible via MaPS’ main contact number) as a key source of information and advice for borrowers with inactive lenders, including signposting to specific brokers that will be able to help.
The Government continues to work with the mortgage lending sector to ensure support is available for consumers.
The FCA also recently noted that firms should be reviewing their variable rates to ensure they adhere to regulations regarding the fair treatment of consumers. The full statement can be found here: https://www.fca.org.uk/news/statements/statement-mortgage-prisoners
Asked by: Patrick Grady (Scottish National Party - Glasgow North)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the effect of mortgage holidays taken during the covid-19 outbreak on the credit ratings of mortgage prisoners.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
Following the Coronavirus outbreak, the Government worked quickly with lenders and financial regulators to give people access to payment holidays on their mortgages. This gives customers a much-needed respite period, where no repayments on these products are due. It was necessary to bring this temporary measure in, in order to give customers time to smooth out their finances that may have taken a hit by the pandemic.
The FCA issued guidance to all firms that engage in mortgage activities, this includes all borrowers whose mortgage is in a closed book or owned by an inactive lender.
We were clear from the start, that anyone taking a one of these payment holiday should not suffer a worsening arrears status.
Asked by: Kate Osborne (Labour - Jarrow)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what recent discussions he has had with representatives of the mortgage lending sector on easing the financial pressures faced by people paying double interest on their mortgage during covid-19 outbreak; and what plans he has to help those people switch to new mortgage lenders.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The Government remains committed to supporting these borrowers, which is why the Government and the FCA have taken action to remove the regulatory barriers that previously prevented switching.
Lenders are currently making the necessary adjustments and system changes to enable them to use the modified affordability assessment for borrowers looking to re-mortgage. Due to the operational constraints caused by Covid-19 there was a temporary retraction of mortgage products in the market, therefore it would not have been of benefit to contact borrowers when meaningful options were not available to them. We expect lenders to start offering these borrowers switching options by the end of the year.
Earlier this year I wrote to UK Finance outlining my expectation that as many of its members as possible should move quickly to offer new deals to borrowers that are eligible to switch under the new FCA rules. You can read the letter here:
The Government continues to work with the mortgage lending sector to ensure support is available for consumers.
The FCA also recently noted that firms should be reviewing their variable rates to ensure they adhere to regulations regarding the fair treatment of consumers. The full statement can be found here: https://www.fca.org.uk/news/statements/statement-mortgage-prisoners
Asked by: Kate Osborne (Labour - Jarrow)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the effect of the modified affordability assessment on the number of mortgage prisoners unable to access new mortgages.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The Government remains committed to supporting these borrowers, which is why the Government and the FCA have taken action to remove the regulatory barriers that previously prevented switching.
Lenders are currently making the necessary adjustments and system changes to enable them to use the modified affordability assessment for borrowers looking to re-mortgage. Due to the operational constraints caused by Covid-19 there was a temporary retraction of mortgage products in the market, therefore it would not have been of benefit to contact borrowers when meaningful options were not available to them. We expect lenders to start offering these borrowers switching options by the end of the year.
Earlier this year I wrote to UK Finance outlining my expectation that as many of its members as possible should move quickly to offer new deals to borrowers that are eligible to switch under the new FCA rules. You can read the letter here:
The Government continues to work with the mortgage lending sector to ensure support is available for consumers.
The FCA also recently noted that firms should be reviewing their variable rates to ensure they adhere to regulations regarding the fair treatment of consumers. The full statement can be found here: https://www.fca.org.uk/news/statements/statement-mortgage-prisoners
Asked by: Kate Osborne (Labour - Jarrow)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what recent discussions he has had with representatives of the mortgage lending sector on tackling the situation affecting mortgage prisoners.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The Government remains committed to supporting these borrowers, which is why the Government and the FCA have taken action to remove the regulatory barriers that previously prevented switching.
Lenders are currently making the necessary adjustments and system changes to enable them to use the modified affordability assessment for borrowers looking to re-mortgage. Due to the operational constraints caused by Covid-19 there was a temporary retraction of mortgage products in the market, therefore it would not have been of benefit to contact borrowers when meaningful options were not available to them. We expect lenders to start offering these borrowers switching options by the end of the year.
Earlier this year I wrote to UK Finance outlining my expectation that as many of its members as possible should move quickly to offer new deals to borrowers that are eligible to switch under the new FCA rules. You can read the letter here:
The Government continues to work with the mortgage lending sector to ensure support is available for consumers.
The FCA also recently noted that firms should be reviewing their variable rates to ensure they adhere to regulations regarding the fair treatment of consumers. The full statement can be found here: https://www.fca.org.uk/news/statements/statement-mortgage-prisoners
Asked by: Mark Hendrick (Labour (Co-op) - Preston)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what recent steps he has taken to mitigate the financial pressures faced by mortgage prisoners during the covid-19 lockdown; and what plans he has to enable mortgage prisoners to switch to new lenders.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
On 17 March the Chancellor announced the availability of a three-month mortgage holiday as part of an unprecedented package of support for individuals, businesses and the economy affected by Covid-19. This help was further extended on 2 June through the publication of FCA guidance. This guidance applies to all firms that engage in mortgage activities to instruct them to offer support to customers that are experiencing financial difficulty due to COVID-19.
The Government has also taken action with the FCA to support mortgage prisoners by removing the regulatory barriers that previously prevented some from switching. Lenders are currently making the necessary adjustments and system changes to enable mortgage prisoners to switch and we expect them to start offering borrowers products using the new rules soon.
Asked by: Tracey Crouch (Conservative - Chatham and Aylesford)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the effect of the modified affordability assessment on the number of mortgage prisoners unable to access new mortgage products.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The Government remains committed to supporting these borrowers, which is why the Government and the FCA have taken action to remove the regulatory barriers that previously prevented switching.
Lenders are currently making the necessary adjustments and system changes to enable them to use the modified affordability assessment for borrowers looking to re-mortgage. We expect lenders to start offering these borrowers products using the new rules soon.
I have written to Stephen Jones, Chief Executive Officer of UK Finance outlining my expectation that as many of its members as possible should move quickly to offer new deals to borrowers that are eligible to switch under the new FCA rules. You can read the letter here: