One mortgage prisoner is at 'breaking point' after paying more than £91,000 in mortgage repayments so far after becoming trapped on high interest rates.
Mortgage prisoner, Rebecca Wendel, is a self-employed hairdresser who is currently stuck on an interest rate of 9.79 per cent due to the collapse of the Northern Rock bank.
She now has monthly payments of £2,150, an increase from the £1,049 she was paying in August 2022 when she was on a mortgage rate of 6.75 per cent.
Wendel is among more than 200,000 homeowners who have become mortgage prisoners due to stricter lending restrictions meaning they cannot pass affordability checks which would allow them to access lower interest rates.
Last year, Wendel was told that she was not eligible for a mortgage that would see her pay 4 per cent in interest as she “couldn’t afford it” and was instead told to stay on her more expensive scheme.
Background
The 46-year-old from Leeds and her now ex-husband took out a mortgage of £284,000 with Northern Rock in 2007 and still owes the full amount 17 years later.
The couple were previously on a repayment mortgage in 2007, but were convinced by a broker to switch to an interest-only deal on a temporary basis to help pay for an extension.
“He advised us to go interest only, save the money for two years and then go back to a repayment mortgage,” Wendel said.
However, nine months into their deal, Northern Rock collapsed and their loan was sold on and, since then, Wendel has been unable to switch to a more favourable mortgage deal because of stricter lending criteria.
Impact
She has been struggling to pay the mortgage on her own since 2016, and says the constant interest rate rises since December 2021 have left her “at a breaking point”.
“It’s a constant, daily battle to get up and get on with the day knowing that at the end of it there’s nothing to show for it other than being able to maintain the roof over my head,” she said.
“I’m taking it a month at a time now because it’s killing me. I’m working all the time, it’s just ridiculous. I’ve got no home life whatsoever, and we don’t do things that other families do because I’m not at home.
“I can’t be at home because I have to be at work, that’s the only way I can earn enough money to keep this going.”
Wendel said her situation has forced her to contemplate moving: "At the moment I’m still 50/50 about putting the house up for sale”.
But she described feeling conflicted about this as “part of me feels that’s giving up, but equally I can’t afford to keep doing what I’m doing”.
Damon Parker, senior partner at Harcus Parker - a law firm which represents mortgage prisoners - said: “Tens of thousands of mortgage prisoners are still stuck on these high interest rates through no fault of their own.
“Ms Wendel’s case is typical of the financial pressure and misery caused to tens of thousands of mortgage prisoners.
“It is our contention that these people have been terribly financially exploited and deserve recompense.”
Last month, a bill designed to address the plight of mortgage prisoners was introduced to parliament.
Martin Docherty-Hughes, MP for West Dunbartonshire, said the bill aims to end evictions for mortgage prisoners and lighten the burden they carry.
“Our constituents have been dealing with high mortgage rates for over a decade. We gain nothing from pushing our constituents further into debt,” he said.
Docherty-Hughes said the government owed it to mortgage prisoners to “help them find a way out of their current mess” by allowing them to pivot back into the mortgage market.
The second reading of the bill is expected on June 14th.
tom.dunstan@ft.com
What's your view?
Have your say in the comments section below or email us: ftadviser.newsdesk@ft.com
