JustUs founder Lee Birkett has said that his platform will start offering peer-to-peer owner-occupied residential mortgages from the new year, with or without an exemption from the government.
Birkett said that he is still collaborating with ministers for an exemption to offer JustUs’ People’s Mortgage, which would have a 2.5 per cent fixed interest rate for borrowers. He is calling for the product to have a one per cent government guarantee and for the investment to be Innovative Finance ISA eligible.
JustUs is able to offer these mortgages as it received permissions from the Financial Conduct Authority (FCA) in January. However, an exemption from the government would make the application process simpler for borrowers.
“We have permissions from the regulator but want an exemption to allow us to write mortgages simply with a one page exemption for people, similar to the one page digital form for applications for the bounce back loan scheme, and to help more mortgage prisoners,” Birkett said.
“We’re pushing for the exemption again, getting in touch with the economic secretary to the Treasury John Glenn, to reopen those discussions.
“We will move ahead with P2P mortgages in the new year without the exemption, it would just be more difficult to help mortgage prisoners find a new deal. We would only be able to help two out of 20 without an exemption as opposed to 15 out of 20 with one.
“The current rules and regulations to help mortgage prisoners are not fit for purpose. The Treasury has said that banks will sort it and they haven’t. The industry hasn’t got a solution but P2P has.”
Birkett welcomed the findings from a report on mortgage prisoners, conducted by the London School of Economics and commissioned by MoneySavingExpert, as highlighting the issue, but disagreed with their proposals.
The research found only the government can release the 250,000 mortgage prisoners it has failed and proposed introducing interest-free government equity loans.
“I welcome the findings where they identified shortcomings but unfortunately their proposals are not a viable solution,” said Birkett.
“They won’t work because unfortunately these borrowers are high risk so traditional institutions won’t accommodate them.
“Our solution is the best one, an ISA with a one per cent government guarantee.
“We are now looking forward to formal engagement to deliver a viable solution with great British fintech and P2P at its heart and with Rishi Sunak’s announcement of central bank currency which is a real positive step forward.”