On 31 July 2018, UK Finance announced that 59 authorised lenders representing 93% of the UK’s residential mortgage market have agreed common standards to help existing borrowers on reversion rates who are up-to-date with repayments but, because of stricter affordability criteria, are currently ineligible to move to an alternative product provided by their lender.

For borrowers to qualify, the following standard principle-based criteria apply. They must:

  • be first charge owner-occupiers;
  • be existing borrowers of an active lender;
  • be on a reversion rate;
  • be looking for a like-for-like mortgage;
  • be up to date with payments ;
  • have a minimum outstanding loan amount of £10,000; and
  • have a minimum remaining term of 2 years.

The common standards are the result of a cross-industry voluntary commitment announced by UK Finance, the Building Societies Association and the Intermediary Mortgage Lenders Association. The FCA has issued a statement welcoming the initiative, noting that in its Mortgages Market Study Interim Report it sought views on whether and how to enable customers on an active lender’s reversion rate to switch to a better deal in certain circumstances. The regulator states that it will work closely with the industry to discuss the detail of this arrangement and monitor the impact it will have. It will also continue to work with industry to identify solutions for borrowers who have mortgages with inactive firms and any active lenders not signed up to the common standards.