MPs and campaigners are meeting Britain’s financial watchdog to demand action is taken to help 170,000 mortgage prisoners.
Tory Keith Hollindrake and Labour’s Seema Malhotra have joined forces with Rachel Neale, co-founder of the Mortgage Prisoners campaign group, to persuade the Financial Conduct Authority (FCA) to do more for home owners trapped on high interest rates.
In the worst cases some ‘mortgage prisoners’ have been trapped into paying off their loan at 11% while current rates are at or close to record lows.
Many of them are also customers of former nationalised lenders like Northern Rock and Bradford & Bingley.
Their loans have since been sold on by UKAR to private equity companies and are barred from switching lenders under tougher affordability rules even though they are up to date with current payments and could easily pay off a cheaper deal.
The FCA has already made some changes to help prisoners. Last year they asked lenders to apply more proportionate affordability rules to allow some borrowers to switch.
However, the new rules don’t apply to anyone with an interest-only mortgages – about half of the prisoners.
Ms Neale said: “They have made a really good start in the consultation paper, but unfortunately it is only going to help around 14,000 out of 170,000, and it is not going to help people on interest-only deals, which is the main issue with mortgage prisoners.
“We’re going to be talking about how it can go further and what they can do specifically for the different types of mortgages they are trapped in.”
Mr Hollinrake said: “We’ve allowed lenders to sell their loan books to unregulated inactive lenders, which we have very little power over.
“They can just stick two fingers up at the Government and say ‘we’re not doing that’.
“It is not going to be easy, but somebody somewhere has got to put some pressure on the lenders to do the right thing.”
It is understood the FCA is examining ways to extend its powers to regulate all mortgages, including those held by inactive lenders.
A spokesman said: “We are determined to enable re-mortgaging for those who are eligible under our rule change, meet the criteria for lending and would benefit from doing so.
Action from the industry is needed now and we expect lenders to support this.”