The Mortgage Market Review proposals state that lenders can waive some of the regulator’s affordability rules for mortgage prisoners – for example, those in negative equity or those who have self-certified in the past – only if it means no additional borrowing or higher monthly payments.
However, AMI director Robert SInclair wants the FSA to allow these individuals to borrow up to an additional 10%.
He says: “If a consumer wants to change to a fixed rate mortgage to ensure a greater degree of certainty about their expenditure, even if it means an increase to their monthly repayments, it may be in their best interests to do so.
“There may be circumstances where a small amount of additional borrowing may be needed to make a house move viable i.e. to cover Stamp Duty, estate agents and removal costs etc.
“Such flexibility should be left for the lender to determine as part of its lending policy but we would consider a 10% tolerance on both the additional borrowing and the monthly cost of borrowing to be a reasonable amount.”