The term ‘mortgage prisoner’ refers to borrowers who cannot switch to a better mortgage deal to reduce their outgoings, despite keeping up repayments. In some cases, homeowners are told they “cannot afford” a cheaper deal than their cheaper monthly payments due to tough borrowing criteria.
Most people who are mortgage prisoners had home loans with lenders which collapsed during the 2008 financial crisis.
Loan portfolios from failed mortgage lenders were taken into government ownership and transferred to the Government-owned UK Asset Resolution (UKAR) in 2010. UKAR then progressively disposed of these loans.
A report by the London School of Economics published last year found the government had made £2.4bn from selling mortgage portfolios, yet had not helped those affected.
Sunak was questioned about the situation at Prime Minister’s Questions this week after being challenged by SNP MP Martin Docherty-Hughes (West Dunbartonshire).
‘Almost 200,000 mortgage prisoners trapped’
Docherty-Hughes said: “While there has rightly been much attention paid to the Post Office-Horizon scandal, there is another shocking example of Government and private sector collusion that began under the last Labour administration and continued under the Tories.
“Almost 200,000 mortgage prisoners who borrowed with high street lenders such as Northern Rock have become trapped after the portfolio was sold off to foreign entities like Topaz Finance and Heliodor, who have been creaming off extortionate revisionary standard variable rates, essentially since 2008, leaving even those who kept up with payments in danger of having their home repossessed.”
Sunak said: “I am familiar with the situation for mortgage prisoners. It’s not an easy situation to fix overnight, but there are things being looked at as we speak.”
