So-called “mortgage prisoners” are homeowners who are unable to get a cheaper contract with another lender because they do not meet strict credit criteria, although they would often pay less if they switched. Martin and MoneySavingExpert.com (MSE) have been campaigning for more help for those who are stuck for years.
A statement by Martin was read in the House of Lords on Wednesday after Labor peer Lord Stevenson tabled an amendment to the Financial Services Act. The change was proposed by the all-party parliamentary group on mortgage prisoners. If passed, this would mean a cap on the standard floating rate (SVR) for mortgage prisoners on “closed books” – those who borrow from a company that no longer lends to new customers. The proposed limit is no more than 2% above the Bank of England base rate (currently 0.1%).
The amendment has been discussed but not yet voted on. It will now likely do so at the “Law” stage, which could come before the hiatus, which begins March 25, or after the House returns on April 12. There is no guarantee that it will become law even if it is passed by the House of Lords, as the House of Commons also has to vote on it. A similar amendment was discussed by the House of Commons earlier this year, but not taken forward.
During this week’s debate, various colleagues, including Liberal Democrat Lord Sharkey, have expressed their support for MSE’s mortgage prisoner campaign. Lord Sharkey said he hoped Chancellor Rishi Sunak and Treasury Secretary of Commerce John Glen would acknowledge “their continuing moral obligation” to take action.
It comes after Martin brought the issue to the attention of the Chancellor in his post-budget interview with him last week. The Chancellor praised the work of Martin and MSE on this subject and described an LSE report on mortgage prisoners financed by Martin as “informative”. He agreed that “we need to make sure we have workable solutions” to help all mortgage prisoners.
Martin: “Urgent action is required.”
During the debate, Lord Sharkey read out a statement from Martin that he had made before the amendment was tabled. Martin said: “While the government decided to bail out the banks during the financial crisis, it never bailed the customers of the banks that fell victim to that collapse. Mortgage prisoners have been paying obscene interest rates to their own debt for over a decade.
“They are completely trapped in their mortgages and cannot escape financial misery. Coupled with the devastating impact of the pandemic on people’s finances, urgent action is needed to prevent the situation from becoming disastrous. The independent I funded LSE report did this. ” a coherent argument why an SVR cap is not a balanced long-term solution.
“Instead of anything else, I believe that for those with closed-book mortgages it is a good stopgap solution while other detailed solutions are being worked out, and I am very glad that the All Party Group on Mortgage Prisoners is pushing this forward for those who would provide immediate relief to those most at risk of financial ruin. Nobody should underestimate the threat to wellbeing and even life if it does not and soon occurs. “