This Policy Statement sets out the changes we are making to our responsible mortgage lending rules and guidance based on our proposals in Consultation Paper (CP) 19/14) and the feedback we received on them.
In CP 19/14 we set out our concerns that some consumers cannot switch to a more affordable mortgage despite being up to date with their mortgage payments.
This includes those who can’t switch because of changes to lending practices during and after the 2008 financial crisis and subsequent regulation that tightened lending standards – often called ‘mortgage prisoners’.
We concluded that consumers in this position, or who could be in this position in the future, are suffering harm, as they are paying higher than necessary mortgage payments.
We are therefore amending our responsible lending rules and guidance help remove potential barriers to consumers switching to a more affordable mortgage and to reduce the time and costs of switching for all relevant consumers. The changes will mean that:
This policy statement will be relevant to:
All the rules outlined in this Policy Statement come into force immediately.
If you are a lender, you can choose to start using the modified assessment as soon as you are ready to do so.
We will publish the technical documents (Data Reference Guide) in February 2020.
If you are an eligible consumer looking to switch based on the modified assessment, we recommend you check the Money Advice Service website.