The House of Lords has voted in favour of an amendment to the Financial Services Bill to impose a cap on standard variable rates charged to mortgage prisoners.
According to the wording of the clause, the cap would apply to borrowers who are unable to switch lender and whose mortgage is owned by an inactive or unregulated business.
Lords voted 273 to 235 in favour of keeping the amendment yesterday, however the Bill now returns to the House of Commons and the UK Mortgage Prisoners action group is urging MPs to support the proposal.
It says: “We would like to thank Lord Sharkey, co-chair of the All-Party Parliamentary Group for Mortgage Prisoners, for the inclusion in yesterday’s debate of the amendments for mortgage prisoners in the Financial Services Bill.
“Our thanks also go to the peers who spoke with such understanding of our situation and with great respect for the people who have been trapped in this position through no fault of their own.
“The successful vote has brought immense relief to our members with renewed hope that their plight might finally be resolved.
“Implementing an SVR cap for closed book, inactive entities will bring an immediate end to the emotional, mental, and financial hardship and economic immobility that mortgage prisoners have faced for over a decade.
“We are disappointed that Lord True sought to have these amendments removed and that no Conservative Lords representatives voted to consent. “We will expect much better from our constituents’ Conservative MPs when the Bill and amendments are voted on in the Commons.
“Parroting the economic secretary to the Treasury John Glen, Lord True sought to convince the House that appropriate intervention, in respect of the modified affordability test, had already been taken by the Treasury and FCA and that this intervention needed time to become established.
“These measures were announced in 2019 after a lengthy consultation and have helped only 40 mortgage prisoners thus far.
“We do not have the privilege of time.
“Mortgage prisoners and their children cannot spend another year in financial hardship; we cannot have another family break up, mental breakdown, a home or life lost because of successive governments’ failure, both in causing the problem and then failing to resolve it.”
The campaign group adds: “The Lords have spoken – and so now must every constituent’s MP so that a significant tangible change to thousands of British families’ lives is made.
“This includes Conservative MPs who must be free to support the constituents they work for without interference and pressure from internal lobbying, which goes against our British democratic values and is at the heart of our political system and social lives.”
MoneySavingExpert.com founder Martin Lewis adds: “I am delighted that the Lords has seen the injustice that has been heaped on 100,000s of mortgage prisoners.
“While the government chose to bail out the banks in the financial crisis, it has never bailed out the banks’ customers who were victims of that collapse.
“Mortgage prisoners have been left paying obscene interest rates for over a decade, through no fault of their own.
“They have been completely trapped in their mortgages and unable to escape the financial misery this causes.
“Coupled with the devastating impact of the pandemic on people’s finances, the vote from the Lords is right to push for urgent action to prevent the situation from becoming catastrophic.
“The independent LSE report I funded has a cogent argument as to why an SVR cap isn’t a balanced long-term solution.
“But in lieu of anything else, I believe for those on closed-book mortgages it is a good stopgap while other detailed solutions are worked up – so this vote is an important move.
“And while it will be tough to get the Commons to enact it against government wishes, at the very least it ramps up the pressure on the government to come up with alternative solutions, at speed, which Rishi Sunak promised me, on the record, that he would do.”
