The trade body has been campaigning on the side of trapped mortgage borrowers but its lobbying has fallen on deaf ears as the Financial Conduct Authority (FCA) fails to acknowledge a group of around 1 million consumers.
Sinclair said: “We continue to raise the plight of the mortgage borrower with the FCA in our meetings. Its response is that we should highlight individual cases where borrowers have been locked out of remortgaging, but we don’t think this is an appropriate way of tackling the problem.
“We think this problem will only start to be resolved when the prospect of an interest rate rise becomes a reality.”
Many mortgage prisoners, stuck on Standard Variable Rates (SVR), can afford their repayments while rates remain low, said Sinclair.
He warned if rates began to rise, it could a cause a hiatus in the market as people rushed to remortgage but were unable to secure a new deal, raising the profile of the problem.
Research carried out by AMI, based on Q2 internal sales data from its members which it is unable to disclose, revealed a different picture to that which the FCA painted in the findings of its Responsible Lending Review. AMI’s study aimed to uncover the extent of invisible mortgage prisoners, those which were stopped before being assessed by the lender. This compared to the regulator’s review, which considered the fair treatment of borrowers once they had entered the lender’s processing systems and how far lenders were using the flexibility afforded under Transitional Arrangements.
In AMI’s economic bulletin, the trade body said the regulator had gone on record to admit it hadn’t looked at whether trapped borrowers existed.
Sinclair said he was reassured to see that the issue had gathered support, with the backing of MoneySavingExpert’s Martin Lewis and Citizens Advice, but AMI would continue to escalate the issue until a resolution could be found.