The inquiry will look at how government and Financial Conduct Authority (FCA) policies are affecting people whose mortgages were sold to inactive lenders.
“More than anything, mortgage prisoners told us how frustrating it is to be paying five per cent or six per cent and to be told that you cannot ‘afford’ a mortgage which would halve your interest rate and reduce your mortgage payment significantly,” said Seema Malhotra MP, co-chair of the APPG.
The inquiry will ask whether the FCA’s proposed new affordability rules provide adequate options for mortgage prisoners. The mooted changes allow mortgage prisoners a modified affordability assessment, which will potentially waive questions about their income.
The probe will further consider the effectiveness of the UK Finance voluntary agreement to which the majority of active lenders have signed up.
The APPG said it was “particularly interested” in hearing from mortgage prisoners about their situation and what changes they would like to see introduced.
The move follows on from a letter sent to Tesco Bank chief executive Gerry Mallon last month, asking him to seek an active lender as a buyer for its mortgage book. The letter was signed by 29 MPs and was co-ordinated by the APPG.
Malhotra and Charlie Elphicke MP established the APPG on mortgage prisoners in early May 2019 to represent those who become trapped into mortgages when their provider sells the business to an inactive or unregulated lender.