Almost 60 lenders in the UK residential mortgage market are to help borrowers move to an alternative product that offers better repayment rates.
The homeowners involved are up to date with their repayments but struggling to switch to a better mortgage deal because of lenders are applying stricter affordability criteria.
Since the Financial Conduct Authority (FCA) issues its interim Mortgages Market Study report, a total of 59 lenders, covering 93 percent of the residential mortgage market, have agreed on a set of common standards to help their borrowers switch deals.
Offer in writing by end of year
The interim report had identified a small number of borrowers who could not move from their current mortgage deal.
Now, with the help of UK Finance, the trade body for the finance industry, the Building Societies Association and the Intermediary Mortgage Lenders Association (IMLA) will offer alternative products to their existing customers.
All eligible borrowers will receive an offer in writing by the end of 2018. Any customer happy with their current deal is under no obligation to switch, but as the alternative offer is likely to mean reduced repayments, most are likely to take up the offer.
Voluntary commitment from lenders
Jackie Bennett, director of mortgages at UK Finance, said: "Lenders have responded to the FCA's challenge and made a voluntary commitment to help these long-standing borrowers. We expect more lenders to participate in the coming months."
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