Earlier this week the FSCP said lenders should not be allowed to discriminate against mortgage prisoners by charging them a penal rate of interest.
The consumer body said this should be added to the Mortgage Market Review in the form of a rule enforcible by the Financial Services Authority.
AMI director Robert Sinclair said: “The transitional arrangements introduced should aim to reduce the impact on consumers who could otherwise become property and/or mortgage prisoners.
"This is particularly the case for those who may have self-certified in the past, have good payment histories and have enjoyed the benefits of interest only loans. It is important that the market continues to allow such existing customers to have some flexibility, without taking on significantly greater financial exposure."
Sinclair said 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.
And he added that AMI believed there may need to be a greater degree of flexibility on the “no new borrowing” restriction.
He said: "There may be circumstances where a small amount of additional borrowing may be in the consumer’s best interests, or may even be needed to make the 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."
Sinclair said the problems identified by the FSCP in terms of potential consumer detriment from customers becoming mortgage prisoners is "quite right" but added that the scale of this problem will only be fully exposed when Bank of England Base Rate starts to rise and consumers look to see what they can do to protect themselves.
