Mortgage prisoners could be one step closer to a solution as campaigners continue to pressure the government and the Financial Conduct Authority to help them escape their high-rate mortgages.
Pressure group UK Mortgage Prisoners has appealed to the Treasury select committee to force through change to allow such prisoners — who currently cannot switch to a more affordable mortgage despite being up-to-date with their mortgage payments — to get a better deal.
These consumers are predominantly borrowers who took out a mortgage before the financial crisis but are now blocked from switching to better rates due to changes in lending practices.
In some cases consumers are told they cannot afford the new deal under the lending rules despite the new policy having cheaper monthly payments than their existing one.
Last month, the government sold NRAM — formerly part of Northern Rock — mortgages to inactive lender Citi, creating more mortgage prisoners.
Campaigners from UK Mortgage Prisoners met with MP Nicky Morgan, chairman of the Treasury select committee, and MP Seema Malhotra, who has set up an all-party parliamentary group on the issue last week (April 26).
Speaking to FTAdviser, Rachel Neale, mortgage prisoner campaigner, said the meetings went well.
She said: "We eventually want there to be a public inquiry over why we were sold to inactive lenders and how the government and the FCA can help mortgage prisoners properly.
"The APPG, set up by MP Seema Malhotra, is going to push for this by gaining support from other MPs."
Ms Neale described the process as a ‘waiting game’ but stressed the issue was an urgent one for many struggling on a high rate.
She said: "Many are looking at being repossessed and are experiencing problems with their mental health. Some have even been suicidal over this. We’ve waited for 11 years for something to change."
The campaigners are also asking the government and the regulator to manage the way inactive lenders pressurise consumers stuck on costly policies.
Ms Neale added: "We’re asking that they try and speak to these inactive lenders and ask them to take their foot off the pedal while these discussions are ongoing.
"These debt collectors constantly apply so much pressure on these people who are really struggling. It’s causing relationship breakdowns and mental health problems."
On Friday UK Mortgage Prisoners spokespeople will meet with Andrew Bailey, chief executive of the FCA.
In its Mortgage Market Study published in March the watchdog suggested amending its rules to give lenders the option to undertake a "modified affordability assessment" for such consumers, but the regulator had previously admitted the removal of regulatory barriers would not help all 'mortgage prisoners'.
At the trade body's annual mortgage lunch earlier this month, UK Finance called on the government and the FCA to do more to help the mortgage prisoners who cannot be assisted by the regulated industry.