Mortgage prisoners: The 'forgotten victims' of financial crash call for an inquiry
Vulnerable people are facing the threat of losing their homes due to the mortgage prisoners scandal, the Government has been warned.
Members of the UK Mortgage Prisoners Campaign Group have stepped up their calls for a public inquiry into a saga which has left thousands of consumers trapped on high interest rates since the 2008 financial crisis. Many have loans that were sold by the state to “closed book” inactive lenders, largely investment companies that are not regulated to lend new mortgages, making it difficult for them to move to cheaper rates.
Mortgage prisoners have been described as the forgotten victims of the financial crash, by consumer champion Martin Lewis.
However members of the Mortgage Prisoners Campaign Group said they had come away from a meeting with Treasury Minister Emma Reynolds “with no hope that this Labour Government who supported our campaign in opposition have any desire to work on solutions to the Government created mortgage prisoner issue”.
Calls to establish an independent inquiry into the treatment of mortgage prisoners were rejected by the Government earlier this year.
Liberal Democrat Lord Sharkey tabled legislation to require the Government to establish a public inquiry to examine the “17 years of harm caused to mortgage prisoners”.
However, in February, Treasury Minister Lord Livermore said the Government does not believe a further inquiry would provide “any significant new information or additional support to those affected” given the amount of information already publicly available.
According to the Mortgage Prisoners Campaign group, there are still no plans and no agreement to form a solutions group to resolve the crisis “but simply a repetition of ineffective and inapplicable supports for the mainstream market which do not help mortgage prisoners”.
Costed solutions to the crisis facing mortgage prisoners were put forward in a report by LSE London published in 2023. The report ‘Releasing the mortgage prisoners: proposed solutions and illustrative costing’ was funded by a private donation from Martin Lewis, and commissioned by MoneySavingExpert.
The latest statement from the campaign group added: “The Labour Treasury is as deaf in Government to the severe and foreseen consumer harm to the mortgage prisoner community as the previous Conservative Ministers were citing the issue as ‘too complex’ while ignoring our proposals and the LSE Reports funded by Martin Lewis.”
Rachel Neale, Lead Campaigner, said: "We have sat with multiple Ministers in Treasury, both Conservative and now Labour, explaining the situation on the ground for our members and the severe detriment suffered by thousands of trapped pre-2008 borrowers, from a time when they took on safe mortgages but were sold down the river by their Government without protections.”
Ms Neale said Labour have acknowledged the harm “but frankly, do not seem motivated to act”.
She added: "In the meantime, we are dealing with extremely vulnerable, highly distressed people facing losing their homes and many for whom it is too late. Thousands of interest only mortgages sold without repayment vehicles prior to regulatory change are coming to end of term and these people are losing their homes with insufficient equity to find anywhere else to live.
Repossessions in the mortgage prisoner community are disproportionate, and we have been calling for effective action for years now with no Government prepared to act".
The Campaign Group has called for a public inquiry and demanded sales of residential mortgages to non-lending investment funds “with no products to offer is not permitted to continue”.
A HM Treasury spokesperson said: “We recognise the challenge mortgage borrowers who are unable to switch to a new mortgage deal face, which is why we will work with regulators and the industry to ensure this issue is properly considered.
"There are significant measures in place to protect vulnerable mortgage holders, including Financial Conduct Authority rules requiring lenders to engage individually with their customers who are struggling, and if any borrower is concerned about making their mortgage repayment, it is important they get in touch with their lender as soon as possible.”