West Brom launches support for mortgage prisoners

It will be implementing a new modified affordability assessment through a specific range of mortgage products.

From Monday there will initially be two products – one at 60 per cent loan-to-value for interest only and the other limited to 75 per cent loan-to-value for capital repayment applications.

The launch coincides with the introduction of a dedicated mortgage prisoner’s portal hosted by the Money and Pensions Service that is due to go live in the coming week.

The service will provide a list of intermediaries who have signed up to support the modified affordability assessment, making is easier for mortgage prisoners to apply for the new assessment.

Borrowers who believe they might be eligible under the new assessment can access the products initially through the West Brom’s direct mortgage advisors and intermediary partner Mortgage Force. The mutual will then be expanding the range to any intermediaries that have signed up to the Money and Pension Service portal.

West Brom chief executive, Jonathan Westhoff said: “Mortgage prisoners, or people trapped on their current mortgage product, have been a growing issue that has rightly received much greater focus as mortgage rates have continued their downward trend over the last decade. We know that some of these borrowers have been unable to access significantly better deals for many years, some since the financial crash in 2008, and the support lenders have now received from the regulator has paved the way for change.

“We recognise that this is just the beginning and there is a lot more work that needs to be done by both lenders and intermediary firms, to help those people who have been stuck on a mortgage product for a number of years already. The West Brom can only make a small difference, but we hope that we can at least start the process of helping by creating a more active market, supported by more affordable products.”

Mortgage prisoners are borrowers in closed mortgage books who, due to the stringent requirement on affordability tests introduced following the financial crash of 2008, have been unable to take advantage of lower cost mortgage options as their current lender offers no product alternatives to its standard variable rate.

The Financial Conduct Authority estimates that around 250,000 UK mortgage holders can be classed as mortgage prisoners. Of this, approximately 14,000 have been assessed as potentially immediately eligible to switch products using the modified affordability assessment.

In order to qualify for the society’s products, borrowers must first be able to evidence they are in a closed book or held by an inactive lender and be eligible under the FCA’s Modified Affordability Assessment rules, which require, as a minimum, existing mortgage payments to have been made for a period of 12 months and there to be no arrears position.