Government rejects interest rate cap for mortgage prisoners

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    Tory MPs are largely voting against the amendment

    However, in order to become part of the Financial Services Act, the House of Commons had to vote on the amendment on Monday (April 26).

    • 355 MPs voted against the amendment. Of those who voted against, all 355 were Tory MPs (only two Conservatives voted for the amendment). A similar amendment was discussed but was not adopted by the Commons earlier this year either.
    • 271 MPs voted for the amendment. You can see which MEPs voted for and against the amendment on the Parliament.uk website.

    During the debate, Seema Malhotra MP, APPG co-chair for Mortgage Prisoners, advocated the change, referring to Martin. She said: “Mortgage prisoners have been neglected for more than 10 years. Families have been destroyed and homes have been lost. While the minister calls for another review, mortgage prisoners struggle to make their monthly payment every month due to high interest rates.

    “The delays will result in more homes being lost. As consumer champ Martin Lewis said, a closed mortgage SVR cap” would “provide immediate emergency relief to those most at risk of financial ruin. Nobody should underestimate the threat to well-being and even life if it doesn’t and soon happens. “”

    Meanwhile, Conservative MP Kevin Hollinrake, APPG vice chairman for mortgage prisoners, admitted that “we completely misunderstood the balance” trying to weigh public finances against the consumer disadvantage. While Mr Hollinrake said the government was “obliged” to find a solution to the problem, he voted against the amendment as the government was committed to finding an alternative solution.

    LSE research has been used in arguments both for and against the cap

    Other MPs cited MSE and the London School of Economics (LSE) November 2020 report on mortgage prisoners as reasons for support and opposition to the change. John Glen MP, Secretary of State and Secretary of the Treasury, said: “I am concerned that capping standard floating rates, including a cap that only applies to inactive lenders, would have unintended consequences for financial stability. The LSE agreed and did not recommend an upper limit as this could cause market damage. ”

    In response, Labor MP Pat McFadden said, “The minister [John Glen] quoted the LSE report. Financial journalist Martin Lewis, who endorsed this report, has spent the last two days encouraging this House to support the Lords’ amendment. The LSE report listed a number of other things that the government did not do, such as: B. Government equity loans, loan removal – a particularly difficult product – partial loan write-offs, and mortgage bailout programs. The government did not respond to any of these measures. “



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