"So-called ‘mortgage prisoners’, trapped on expensive deals and unable to switch to cheaper loans are a reflection of a dated lending environment"
The percentage of mortgage prisoners out there is small, if not tiny, compared to the market as a whole. But that doesn’t make the case to set these people free from the punitive Standard Variable Rates (SVRs) they are stuck on any less pressing.
The moral imperative to help out this small minority is growing by the day and you sense a solution is not far off to circumvent what Chris Woolard, a senior figure at the Financial Conduct Authority(FCA), describes as the intricacies of the regulatory perimeter...
Isn't this a bit absurd?
Who needs to go to a Harold Pinter or Samuel Beckett play when the Theatre of the Absurd is unfolding right before our eyes within the UK mortgage sector?
The biggest irony of all is that the banks are actually keen to get these prisoners back into the regular mortgage system — they’ve shown their repayment mettle, after all — but doing so could create issues with the FCA.
The mortgage prisoners debate is symbolic of a bigger narrative unfolding, focused on the fundamental need to change the way consumers are treated by financial services providers...
How technology can help
Essentially, new technologies are emerging that are using open banking, big data and machine learning to turn the way people secure mortgages on its head.
These technologies will effortlessly help borrowers switch by alerting them (and, where relevant, their advisers) in real-time to mortgage products they will be applicable for.
We’re entering a socially-conscious era for financial services where providers that don’t adhere to the new ‘customer-centric’ rules will fast become irrelevant. It’s an era where the SVR will quickly look like an anachronism.
It’s finance, Jim, but not as you know it. It’s finance for good.
You can read the full article from What Mortgage here.