Feltham and Heston MP Seema Malhotra has today commented on mortgage prisoners who risk losing their homes due to rising interest rates.
A mortgage prisoner is a borrower who is trapped in a high-interest mortgage, often because their provider collapsed during or soon after the financial crisis of 2008. They cannot switch provider, even if they are up-to-date with their payments. Their mortgages are now owned by other companies and must still be repaid, despite often carrying conditions that would be barred by regulations that have been introduced since the financial crisis.
Seema Malhotra has been campaigning for action on mortgage prisoners for several years, after having been contacted by constituents who are affected by this crisis, and is currently the Co-Chair of the All-Party Parliamentary Group for Mortgage Prisoners.
On the additional pressures faced by mortgage prisoners during the cost-of-living crisis, which has led to the Bank of England raising interest rates, she said: “We are hearing from mortgage prisoners who are struggling with bills and terrified that further interest rate rises will push them over the edge. We need urgent action from the Government and the FCA so that mortgage prisoners get a fair deal.”
Ahead of the Bank of England raising interest rates, the Chancellor, Jeremy Hunt, met with major lenders and the FCA to discuss support for those struggling to pay their mortgage. It was agreed that lenders should help customers who are up to date with payments switch to a new mortgage without an affordability test.
Responding to this package, Seema Malhotra warned: “The new FCA guidelines won’t deliver help to the 200,000 mortgage prisoners as they don’t cap high standard variable rates or require the vulture funds to offer fixed rates.”
