A mortgage prisoner, who is one of the first to be freed by new affordability rules, is now saving £500 a month, according to MoneySavingExpert.com.

Maurice Latimer, 76, from Milton Keynes took out an interest-only mortgage with Northern Rock in 2001. 

When the bank collapsed, his mortgage was sold on to Cerberus. 

Maurice and his wife were unable to switch lender because their joint income was too low to pass the stricter affordability checks that came into force after the credit crisis – even for cheaper loans.

Maurice was also set to turn 65 before the end of his mortgage term, which also deterred many lenders from offering him a new deal.

Earlier this month he was finally able to transfer his mortgage to West Brom under the modified affordability assessment brought in by the FCA.

This saw his interest rate slashed from 4.59 per cent to just 1.84 per cent on a two-year fixed-rate interest-only deal – halving his payments from £886 to just £401 a month.

Maurice says: “For years, I just got letters saying what was happening by whoever was in charge of my mortgage and I basically had no say – I was passed round like a parcel. 

“I’d tried to switch deals before, but I knew it was a waste of time because of the strict affordability checks. I couldn’t get anything until West Brom came along. 

“Before this saving for me and my wife, the freedom to do what we wanted with our money was gone. 

“I reckon I’ve paid £10,000s more than I should have, and it’s nothing to do with me – it’s not my fault at all.”

Maurice says that while he is relieved to have moved to a new deal, more action is needed to help others stuck on expensive deals. 

The FCA estimated the new rules would only help up to 14,000 of some 250,000 trapped.

MSE founder Martin Lewis has funded research into the problems facing mortgage prisoners and campaigned to get them help.

He says: “Maurice’s tale brought a big smile to my face. 

“For years we pounded at the doors of politicians and regulators to tell them that remortgaging affordability criteria were simply illogical and unfair.

“These meant some people who were meeting current repayments, but wanted to shift to a lower rate, were nonsensically having to be rejected and told ‘you can’t afford a cheaper deal’.

“Finally in 2019, the regulator changed the rules so lenders no longer needed to operate this way. 

“Most sadly haven’t changed yet, but this West Brom mortgage was among the first, launching a few months ago, and Maurice’s story viscerally shows the impact. 

“Of course, cheaper rates mean there’s less risk of default for lenders too.

“While this is good news, it’s no silver bullet.”

Lewis says that mortgage prisoners are the forgotten victims of the credit crisis.

He adds: “While the government bailed out the banks, mortgage prisoners were unfairly left behind in financial misery.

“Much more still needs to be done. 

“In the last fortnight, the London School of Economics published research that we commissioned, which shows that to all intents and purposes, there is little else the regulator can do. 

“Only the government can, and should, step in now to free the rest. In it, there are eight main policy recommendations to improve things. 

“With coronavirus tearing apart people’s finances, it has never been more urgent – if the Treasury doesn’t act, the situation is so devastating for people’s mental health, I worry lives will be lost.”