Individuals who have held a mortgage since before 26th April 2014 and who do not meet the new affordability criteria can still access mortgage deals under a clause in the new regulations called 'Transitional Arrangements'.
Ipswich Building Society's new lending programme will consider these cases as long as the borrower is not increasing their loan and their circumstances have not changed. Applicants will have access to all applicable mortgage products that the lender is offering and this can be used for remortgage and purchasing a new home. The Society has previously supported transitional lending to existing borrowers only.
'Mortgage misfits' is a term used by the Society to describe those who fall outside of the usual system when it comes to access to mortgage lending based on their ability to meet an often automated approach to lending criteria. Examples include the self-employed, self-builders, first-time buyers, older generations and those who have experienced a lifestyle change. Many 'mortgage misfits' have kept up to date with mortgage repayments for many years but find they no longer meet the requirements of new affordability rules under MMR. Misfits may not be offered a remortgage with their same lender and are often unable to access the wider mortgage market in a meaningful way.
The new programme marks a return to the mortgage market for the Society following a major IT transformation programme carried out in 2014 which diverted resources away from mortgage selling. All residential mortgages products available from Ipswich Building Society can have transitional arrangements applied to them. Borrowers in England and Wales can apply to the programme directly or through a selected group of brokers.
Paul Winter, Chief Executive of Ipswich Building Society, says:
"We are standing up for mortgage misfits who are often overlooked by lenders who insist on machine-only application processes. It is possible to still give people a choice while retaining a diligent approach to lending.
"I'm aware that some lenders do not offer transitional arrangements to their existing borrowers, let alone new applicants, and I believe the sector should consider its responsibilities to existing borrowers who have consistently made their mortgage repayments and who otherwise would be classed as 'good customers'. Speaking to the financial services sector, I would urge my peers at other lenders to think about making the mortgage market work more effectively for mortgage misfits by offering choices for those who fall outside the norm.
"Our advantage as a mutual, and as a business which takes a human-centered approach to verifying income, means we can continue to operate in the best interests of our members and future members."
