Mortgage Prisoner

The Startling Truth About Mortgage Prisoners

Are you a mortgage prisoner? A mortgage prisoner is a homeowner who finds themselves in the predicament of being trapped on a high-interest variable mortgage rate with a failed lender who has since been sold. Stricter lending criteria can then make it more difficult to get a better mortgage rate.  This leads to financial strain and uncertainty. Shocking figures show that more than 200,000 homeowners throughout the UK are Mortgage Prisoners. 

It hasn’t gone unnoticed that the government have profited by a staggering 2.4bn on mortgage prisoners. Loans from failed mortgage lenders were transferred to the government-owned UK Asset Resolution (UKAR) back in 2010 after the financial crisis. A report by Money Saving Expert Martin Lewis mentions that in 2009 the government recognised that selling mortgages to inactive lenders had the potential to severely harm consumers, but still no action has been taken for the last 15 years. 

Why Urgent Reform Is Needed:

  • Mortgage Prisoners are burdened with disproportionately high-interest rates, leading to financial pressures and an increasing chance of defaulting on their mortgage loan.
  • With limited options for refinancing or switching lenders, mortgage prisoners face a lack of choices to improve their financial situation.
  • Mortgage imprisonment not only affects borrowers but has broader economic implications, including reduced consumer spending and a stunted housing market.
  • The government has the moral obligation to do the right thing and take long overdue action to fairly assist all borrowers.

What are the proposed solutions?

  • Guaranteed access to fixed interest rates.
  • Prohibiting residential mortgages from being transferred to non-lending mortgage entities.
  • Regulators should work closely with lenders to establish guidelines that facilitate the remortgaging process for eligible borrowers, including those with limited equity or adverse credit history.
  • A ‘Grandfather policy’ should be implemented for affordability criteria.
  • Mortgage providers should proactively reach out to mortgage prisoners to explore viable refinancing options.
  • Mortgage industry experts should collaborate to develop solutions such as shared equity schemes or government-backed initiatives to assist mortgage prisoners in obtaining more favourable mortgage deals.
  • Generate support by raising awareness of mortgage prisoner’s struggles and pressurise policy-makers into prioritising reform.

More action needs to be taken now to help these mortgage prisoners, many people across the UK and Northern Ireland are suffering from financial difficulty, which goes hand in hand with mental health issues and increased risk of homelessness. If you are a mortgage prisoner or need help with your mortgage, Mortgage Solutions Belfast can assist you. Get in touch, to chat with one of our Expert Mortgage Advisors.

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