The UK Mortgage Prisoners Action Group (UKMP Action Group) has called for the government to take “urgent action” to protect mortgage prisoners and to “curb the tsunami of repossessions and forced sales it is seeing”.

The UKMP Action Group has requested to meet with the UK Treasury earlier than its arranged October meeting as it says the mortgage prisoner scandal is “at crisis point”.

Data from the Bank of England and Ministry of Justice show in Q1 2024, the value of outstanding mortgage balances with arrears increased by 4.2% from the previous quarter.

Compared to the same quarter in 2023, mortgage possession claims increased from 4,035 to 5,182, which represents a 28% increase. 

The action group says if reforms proposed under the previous Labour Government had been introduced, “years of misery and pain could have been avoided” stating that it identified the potential for significant consumer harm. 

Increasing interest rates over the last few years has pushed standard variable rates (SVRs) up to between 9% and 13%.

The group says: “The new government has an opportunity to stop the ongoing harm and to reset borrowers’ relationships with the mortgage market.”

“Whilst there is a need for a full public inquiry, this is not the priority today. Today, we need to stop the haemorrhaging of money and homes. We need immediate action.”

The group has called for an immediate halt to repossession actions due to arrears for mortgage prisoners trapped on SVRs or in closed books and for pre 2008 interest only borrowers at term end for an initial period of six months to allow for time to work through solutions with the new government.

The closed book includes Topaz Finance, MAS5, Landmark, Pepper/Engage Credit, Ascenden and Rooftop. 

It has also asked the government to: 

• Ban the ownership of mortgage books by ‘inactive’ lenders who do not operate Lending Licences or offer new products.
• Ban the sale of any further mortgage books to inactive lenders and the holding of mortgages in securitisation vehicles without access to new products.
• Hold accountable legal and beneficial owners of residential mortgages.
• Help facilitate the transfer of mortgages to active lenders at a discount that reflects the tens of thousands of pounds of overpayments mortgage prisoners have overpaid in the years since 2008.
• Review whether SVRs are compatible with the new Consumer Duty.
• Review FCA Mortgage Prisoner definition.

Last month, money saving expert Martin Lewis renewed his call for the government to step in and help 200,000 mortgage prisoners who are trapped on high rates.

In an open letter to the new chancellor Rachel Reeves, MoneySavingExpert.com’s founder Lewis urges her to take action where the previous government failed to do so.

The calls from Martin Lewis and the UKMP Action Group come after the first mortgage prisoners’ court trial started at the High Court on 23 July, involving TSB’s Whistletree subsidiary. 

Harcus Parker said successful cases could open up compensation claims for thousands of former Northern Rock ‘mortgage prisoners’ with average claims estimated to be between £20,000 and £30,000.

The law firm is running the group claim for 2,500 TSB Whistletree mortgage prisoners under no win, no fee agreements.

It is representing 15,000 former Northern Rock mortgage holders in total. 

The mortgage prisoners group action was launched in July 2022 by customers who claim they were locked into mortgages with “excessively high” interest rates.

The court case in London will determine whether TSB has breached the Whistletree mortgage contracts by continuing to charge Whistletree customers their existing standard variable rate when it bought the book, rather than moving them to TSB’s standard variable rate.

It will also determine whether remedies under the Consumer Credit Act would be available in respect of payments made under a customer’s mortgage as well as their unsecured loan, where customers hold a ‘Together Loan’ product.