"There is still a large number of customers of inactive firms who will not be helped by the new rules."
The new rules allow lenders to assess affordability based on a borrower’s track record of making mortgage payments.
The FCA said that some borrowers’ circumstances, such as being in negative equity or having other debts, will mean they will be outside of any lender’s credit risk appetite. Other borrowers, almost 40,000, have mortgages with terms that are close to ending or that are too small to be attractive lending prospects.
Additionally, those paying lower rates, with smaller amounts to repay, and those with interest-only mortgages may find it challenging to find lenders willing offer cheaper deals.
Over half of the group that are eligible are paying interest of 3.5% or less and 39% are paying an interest rate of less than 3.0%.
The FCA admitted that of the 170,000 eligible borrowers, just 14,000 will be both likely to meet commercial lending criteria and stand to make a meaningful saving - just 5.6% of the 250,000 borrowers struggling to switch.
Stephen Jones, CEO of UK Finance, said: “These figures help provide much needed clarity for both customers and lenders confirming that, as per the regulator’s previous estimates, around 14,000 eligible customers will likely meet the lending criteria and stand to make a meaningful saving. Given this number of borrowers, there will be a limited number of firms who, dependent on risk appetite, will be able to develop new products to meet their needs.
“As these figures show, there is still a large number of customers of inactive firms who will not be helped by the new rules and the regulator recognises that many of these customers will also currently sit outside its protection. We therefore urge the government to ensure that all customers, regardless of owner, are treated fairly.”
