Action promised to help thousands of mortgage prisoners
Mortgage prisoners are homeowners who are unable to remortgage or find a lower interest rate due to changes in legislation in the aftermath of the financial crisis.
This means they’re trapped repaying mortgages at a far higher rate “through no fault of their own”, according to John Glen MP, Economic Secretary to the Treasury.
In July this year, UK Finance, the Building Societies Association and the Intermediary Mortgage Lender’s Association announced a cross-industry voluntary arrangement to help mortgage prisoners.
Under the agreement, 67 lenders or 95% of the residential lending market, will write to any borrowers on the reversion rate who are up-to-date with payments and a minimum of two years and £10,000 still to pay on their mortgages to tell them their existing lender can offer them a better deal.
However, as this applies to those with active lenders only, it doesn’t extend to the around 140,000 with inactive lenders, such as B&B and NRAM.
In Glen’s letter to Nicky Morgan MP, chair of the Treasury Committee, he wrote: “While this action has improved the position of borrowers with active lenders, I agree that more still needs to be done to help those who have mortgages with inactive lenders. I have made clear that exploring solutions for these customers is a top priority.”
It follows an evidence session in October where Rushanara Ali MP, member of the Treasury Committee, questioned Glen about mortgage prisoners. She said: “The government and the Financial Conduct Authority have found an answer for customers of active firms. They must now be bold and innovative in finding a swift solution for mortgage customers of inactive firms.
“The Committee will continue its work on this and keep a watchful eye on the government and regulator’s actions.”