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Government-backed loan could help if SVR cap is voted down – Mortgage Prisoners UK

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  • 26/04/2021
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Government-backed loan could help if SVR cap is voted down – Mortgage Prisoners UK
If the government votes against a cap on standard variable rates (SVRs) for mortgage prisoners, then a guarantee scheme similar to the one for first-time buyers could help borrowers trapped paying high interest rates, UK Mortgage Prisoners has said.

 

Lead campaigner Rachel Neale said capping the SVR to two per cent above the Bank of England’s base rate would be a short-term resolve for mortgage prisoners paying high rates on closed book loans. 

She said: “This is a real stop gap solution that until the government come back with a practical solution, either a mortgage-backed guarantee scheme like they’ve done with the first-time buyers or something like that will give us practical help.” 

Although she claimed that Conservative MPs had been instructed to vote down the amendment, Neale said passing it would be the government’s chance to correct issues of the past. 

Neale said: “Today could be an opportunity for the government to right the wrongs of the past. It would make a huge difference to people’s lives, those who are mortgage prisoners. 

“We don’t think from the noises that we’ve heard that the government are going to go for it, they’re going to try to block it. But it would also hopefully be given an opportunity to go back to the Lords where it will keep ping ponging.” 

Neale said she did not want another consultation or report to be opened into the mortgage prisoner situation as that would push the problem further down the road. 

However, she suggested if the government continued to not be forthcoming with a solution, the group would look into opening up a public inquiry alongside its litigation with Harcus Parker.

 

Targeted intervention

Seema Malhotra MP and co-chair of the All-Party Parliamentary Group (APPG) on Mortgage Prisoners said she hoped the amendment would be voted in. 

She added: “It will help and give relief to mortgage prisoners, and the campaign is growing in support with Martin Lewis and in Parliament.”      

Malhotra said the government needed to produce an alternative to the cap if it was voted against and collaboration with borrowers, industry bodies and regulators would be needed for a solution. 

She said: “We’re going to need to have something that is at least a good stop gap if other detailed solutions need to be worked up. Solutions have not been coming through fast enough. 

An SVR cap on closed book mortgages which is a targeted intervention is now essential to protect these mortgage prisoners.” 

This afternoon, MPs will debate the amendment which has gone back and forth between the House of Lords and Commons in Parliament. 

Earlier this month, Lords voted in favour of the cap which if passed, will be applied to two and five-year mortgage terms. 

To be eligible, mortgage prisoners must adhere to certain requirements such as being up to date with payments and having a remaining mortgage term of two years or more. 

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