The All-Party Parliamentary Group (APPG) on Mortgage Prisoners, co-chaired by Seema Malhotra MP, has called for action on exploitation of mortgage prisoners by unregulated funds.
Mortgage prisoners are trapped into paying higher rates of interest to their borrower because they cannot meet affordability tests, brought in after the financial crisis, despite making payments on their current, higher interest rate mortgage.
This has caused particular problems for borrowers who have found their debt sold on to unregulated private equity firms that do not offer new mortgages or more affordable rates.
Seema Malhotra MP, the co-chairman of the APPG on Mortgage Prisoners, said: “Too many mortgage prisoners have been exploited by being held on high standard variable rates or have seen their rate increased with no justification.
“The CMA and the FCA should intervene quickly to cap the interest rates being charged. The coronavirus has led to unprecedented strain on family finances and we need to help mortgage prisoners, including many key workers, get a better deal.”
She was joined by Kevin Hollinrake MP, the co-chair of the APPG on Fair Business Banking, who said:
“It is simply unfair that hundreds of thousands of UK individuals, couples and families are locked out of a mortgage market that the rest of us take for granted. Even if lenders were following the new guidance on the affordability test, the FCA admits that this will only help a small fraction of mortgage prisoners. A cap on the SVR is the simplest and quickest way of addressing this injustice.”