The FCA set out proposals to give more people – including those with variable incomes, older borrowers, and those with past credit difficulties – a better chance of getting a mortgage they can afford.
We welcome this consultation on the Mortgage Rule Review: Supporting first time buyers and underserved consumers. As part of our ongoing work on credit files and financial exclusion, particularly as it relates to victim-survivors of economic abuse, we are involved and invested in this work. We will be responding to questions 11 and 12 in Chapter 5 ‘Credit impaired or recently recovered.
Our research demonstrates that credit information is central to consumer outcomes, including harmful outcomes that StepChange sees as a debt advice charity. Victim-survivors face the sharp end of these harms as often their situation is poorly understood, and they face an impaired credit record because of the behaviour of their abuser. This can, in some cases, lead to them being locked out of affordable mortgage rates, unable to access a mortgage at all, trapped in an unaffordable mortgage or having difficulties switching mortgages. This is in addition to being excluded from affordable unsecured lending, and vital goods and services.
We are broadly supportive of the proposals laid out in Chapter 5. Clarification of the ‘credit-impaired customer’ will support lenders in not disqualifying mortgage applicants just because of adverse information on their credit record, so that evidence about underlying circumstances can be considered. But more work is needed to create a cultural shift in lender behaviour so that perceptions of risk are tempered by the life circumstances that might lead to credit file impairment, including economic abuse.