The UK Mortgage Prisoners Campaign Group, which is a non-profit organisation aiming to highlight the thousands of homeowners that are unable to switch to new products, said it had met with Treasury minister Emma Reynolds and “come away with no hope” that the government had any “desire to work on solutions” to the mortgage prisoner issue.
This is despite the fact that the Labour government had supported the UK Mortgage Prisoners Campaign Group in opposition, calling out the then Conservative government for delaying on the issue.
The group said: “The Labour Treasury is as deaf in government to the severe and foreseen consumer harm to the mortgage prisoner community as the previous Conservative ministers were, citing the issue as ‘too complex’ while ignoring our proposals and the LSE reports funded by Martin Lewis MSE.”
It said it hoped further action could be taken following Lord Sharkey’s Mortgage Prisoner Public Inquiry Bill, which if passed would “establish an inquiry into the events surrounding the creation of mortgage prisoners, their consequences and any other relevant matters, and for connected purposes”.
The bill recently passed its third reading in the House of Lords, with no amendments made, and will now progress to the House of Commons for consideration. It has a further seven stages to gain royal assent and become law.
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The campaign group has called for a public inquiry and demanded that sales of residential mortgages to non-lending investment funds with no products to offer are no longer permitted.
Rachel Neale, lead campaigner for the UK Mortgage Prisoners Campaign Group, said: “We have sat with multiple ministers in Treasury, both Conservative and now Labour, many times, explaining the situation on the ground for our members and the severe detriment suffered by thousands of trapped pre-2008 borrowers from a time when they took on safe mortgages but were sold down the river by their government without protections.
“There must be a move from Labour, who have acknowledged the harm but, frankly, do not seem motivated to act. In the meantime, we are dealing with extremely vulnerable, highly distressed people facing losing their homes and many for whom it is too late.
“Thousands of interest-only mortgages sold without repayment vehicles prior to regulatory change are coming to end of term, and these people are losing their homes with insufficient equity to find anywhere else to live. Repossessions in the mortgage prisoner community are disproportionate, and we have been calling for effective action for years now with no government prepared to act.”
Mortgage prisoners are defined as people who are unable to switch mortgages to a better deal, even if they are up to date with their payments. This is partially due to the creation of closed books when firms collapsed around the financial crisis so their mortgage books were later sold off.
This coupled with more regulation and stricter criteria from lenders can also mean some borrowers are not eligible to switch.
Figures from the Financial Conduct Authority (FCA) estimated that there were around 250,000 mortgage holders in closed books in 2019, and this fell to 195,000 in 2021. It said that of this, only 47,000 are mortgage prisoners.
