Many mortgage prisoners are on brink of poverty, campaign group warns

The UK Mortgage Prisoners’ group was established to help a group of borrowers whose home loans were sold to unregulated lenders following the financial crisis.

They are now unable to remortgage away from the high interest rate deals they were moved into, because they don’t meet the affordability criteria set by regulated lenders.

Some mortgage prisoners are paying rates of up to 12 per cent, according to the group.

The group is calling for the Government to implement a cap on the Standard Variable Rate on these loans, which would bring down repayments for vulnerable customers to fairer levels, and help to prevent arrears and payment difficulties.

Rachel Neale, lead campaigner for UK Mortgage Prisoners, said: “These borrowers are among the most vulnerable home owners because of the exceptionally high mortgage payments they have to meet every month.

“As part of the Chancellor’s support measures, attention should be given specifically to this group and a cap on their interest rates needs to be introduced with immediate effect.

“They were struggling before the pandemic and many are right on the edge of survival now.”

Ms Neale added: “Such high rates cannot be justified on the basis of the risk these borrowers pose, given that the majority have continued to meet their obligations to repay despite the rates.”

“We would also urge lenders who are looking to implement new criteria and offer bespoke help for those mortgage prisoners not to discriminate over those who have taken payment holidays.

“We would like to remind all banks and building societies that they can offer new deals or relax the criteria allowing more mortgage prisoners to move quickly.”

UK Mortgage Prisoners is also seeking to establish a working group to address the rising vulnerability of mortgage prisoners.

Ms Neale said the working group would highlight the growing numbers of mortgage prisoners who are reporting financial problems.

It will also analyse why customers become less engaged when falling into severe financial difficulty and the impact this is having on their mental health.

UK Mortgage Prisoners will publish further details about the working group in the next month.

A Treasury spokesperson said: “We know that being unable to switch your mortgage can be stressful - that’s why we’ve introduced rules that make it easier for some customers to change provider.

"Although decisions about interest rates are up to lenders, we’re working with the Financial Conduct Authority and industry to make sure more people get access to these new deals.

"The FCA has also recently consulted on additional options to support borrowers who may struggle to switch to a new deal.”