The group believes a moratorium should be imposed until the Financial Conduct Authority has completed a review into potential measures that could ease the mortgage prisoners’ plight.
Mortgage prisoners are trapped with their current lenders, which are often inactive or not authorised to offer new products, leaving many paying higher rates than they would otherwise need to.
They are often rejected when they apply for cheaper mortgages because they do not meet toughened borrowing criteria brought in after the 2008 financial crash, even if they are keeping up with repayments.
In April, John Glen, Economic Secretary to the Treasury announced that the Treasury would work with the FCA on a review of their existing data on mortgage prisoners.
The Government said the review will “ensure we have further detail on the characteristics of those borrowers who have mortgages with inactive firms and who are unable to switch, despite being up to date with their mortgage payments.”
In a statement, the Mortgage Prisoners group said: “The FCA review serves only to delay a solution even longer and prolong the struggle for those who have been holding on to their homes in these most difficult circumstances.
“These families are paying interest rates in excess of 4%, some are paying as high as 9%. COVID has severely impacted the most vulnerable in our society and UK Mortgage Prisoners are among that category.”
In April, The Government reversed attempts to provide help for tens of thousands of mortgage prisoners.
The House of Lords had amended the Financial Services Bill to require the regulator to introduce an interest rate cap for affected households. It would also have ensured access to fixed-rate deals, in some cases. MPs voted 355 votes to 271, majority 84, to remove the amendment from the Bill.
Speaking in the Commons, Treasury minister John Glen said he took the issue “extremely seriously” but added: “I am afraid that the Government cannot accept this amendment.”
However, Mr Glen, who concluded the debate, confirmed he was “ready to engage” on the issue. Conservative MP Kevin Hollinrake (Thirsk and Malton) was among those calling on the Government to offer more support to the mortgage prisoners.
In its latest statement, the UK Mortgage Prisoners group said: “We hope the financial industry, regulators, mortgage brokers, advisers and MPs can all show their support for UK Mortgage Prisoners and agree that we need to halt all repossessions while this additional review is completed by the FCA.
An HM Treasury spokesperson said: “We know that being unable to switch your mortgage can be incredibly difficult.
“Many borrowers could now find it easier to switch to an active lender thanks to recent rule changes by the Financial Conduct Authority.
“We will work with the FCA to review the effectiveness of these changes and establish whether there are any further possible solutions that can be found for these borrowers that are practical and proportionate.”
The FCA will review the effect of its recent interventions to remove regulatory barriers to switching for mortgage prisoners and will report on this by the end of November.
The Treasury will use the results of this review to establish whether there are any further possible solutions that can be found for these borrowers that are practical and proportionate, the spokesman said.
A report on mortgage prisoners has been published by the London School of Economics and Political Science (LSE).The research was commissioned by MoneySavingExpert.com, which was founded by consumer champion Martin Lewis.
Mr Lewis said recently: “Mortgage prisoners are the forgotten victims of the 2008 financial crash.”
“There is a moral responsibility to release money to free mortgage prisoners from their penury.”
The LSE found mortgage prisoners are up to 40% more likely than other borrowers to default due to coronavirus. Its research also found that mortgage prisoners are more likely than the average borrower to have general debt problems.
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