Added: 20 June 2019

Ipswich Building Society rolls out like-for-like remortgage range

Move comes ahead of FCA’s proposed changes aimed at helping mortgage prisoners

Ipswich Building Society has launched six new mortgage products aimed at helping borrowers who are unable to access the wider mortgage market following industry-wide affordability stress tests introduced in 2014, commonly known as mortgage prisoners.

The Society’s like-for-like mortgage range utilises existing regulation to offer a lower affordability assessment on application, calculated at product pay rate only and not at a stressed rate. This is available for mortgage holders who would benefit from this more flexible approach to the affordability assessment which is made possible under the current rules. Applicants must have been with their lender for two years or more, be up to date with their repayments and are not borrowing additional funds.

Richard Norrington, CEO at Ipswich Building Society, commented on the launch: “Back in 2014, we were among the first lenders to actively use the FCA’s new Mortgage Market Review transitional arrangements regulation introduced to enable homeowners to switch to a new provider. Whilst the FCA is currently consulting on changes to mortgage assessment criteria, responsible lending rules will not come into effect until the end of the year and are partly targeted at helping mortgage prisoners.

“We recognise that there is also a tranche of homeowners who currently find themselves unable to remortgage away from their current lender due to changes in affordability assessment processes, and who cannot wait for the new legislation. That’s why we’ve developed and introduced our new like-for-like remortgage range, to provide greater opportunity for these borrowers.”

Products

The Society has introduced six remortgage products providing like-for-like solutions for residential, later life and shared ownership applicants:

Residential up to 80% Loan To Value (LTV):

2-year discount rate at the Society’s Standard Variable Rate (currently 5.74%) minus 3.19%, giving a current pay rate of 2.55% for two years from the completion date (5.5% APRC^#).
2-year fixed rate at 2.80% until 30 September 2021 (5.3% APRC^#)

For both products an application fee of £199, completion fee of £800 and CHAPS fee of £35 applies.

Later Life (applicants aged 50+) up to 75% LTV:

2-year discount rate at the Society’s Standard Variable Rate (currently 5.74%) minus 3.24%, giving a current pay rate of 2.50% for two years from the completion date (5.4% APRC^#). This product offers unlimited fee free overpayments and has no Early Repayment Charge
2-year fixed rate at 2.75% until 30 September 2021 (5.3% APRC^#).

For both products an application fee of £199, completion fee of £500 and CHAPS fee of £35 applies.

Shared Ownership up to 90% of the share:

2-year fixed rate at 3.25% until 30 June 2021 (5.4% APRC^#)
Exclusive 2-year fixed rate at 3.15% until 30 September 2021 (5.4% APRC^#) [restricted availability]

Both products have no application fee, completion fee or CHAPs fee.

Loans available from five to 40-year terms, up to a maximum loan of £750,000 for residential and later life options and a maximum of £500,000 for shared ownership. All remortgage applicants benefit from a free valuation up to a maximum property value of £1m and fee assisted legals.

The later life discount rate product has unlimited fee free overpayments and no Early Repayment Charge. All other products during the fixed or discount rate period offer fee-free overpayments up to 50% of the original loan amount. For overpayments in excess of 50% of the original loan amount, or early redemption, an Early Repayment Charge (ERC) applies. For fixed rate products this is at 3% and for discount rate products at 1%. For overpayments this charge is calculated on the overpayment amount that exceeds the 50% allowance, and for early redemption is calculated on the original loan amount.

Customers who do not require the improved like-for-like rules can choose from the Society’s existing remortgage product range, subject to meeting the Society’s usual affordability criteria.

Lending criteria

Residential, Later Life, and Shared Ownership products are available to direct applicants across England and Wales, or through intermediaries based in the Society’s heartland area and members of selected networks and clubs. The ‘Exclusive’ Shared Ownership remortgage product is available to direct applicants and selected intermediaries only.

To ensure effective risk management and to maintain the quality of its lending book, the Society will continue to individually underwrite like-for-like cases and will require applicants to have a minimum of two years’ history with their existing lender, a good credit record, and no material increases in secured borrowing.

Richard Norrington continued: “By applying our manual underwriting approach, we are able to understand the personal circumstances behind each individual mortgage application. This, coupled with our entrance into the like-for-like mortgage market, will enable us to provide greater opportunity for borrowers who find themselves with restricted access to other mortgage products due to guideline changes and the introduction of stress testing.”

^#APRC (Annual Percentage Rate of Charge): The annual rate charged for borrowing expressed as a percentage over the term of the loan.