The FCA has found that over half of mortgage prisoners who would be eligible to switch to a new product using new rules published in late October last year are paying an interest rate of 3.5 per cent or lower.

It adds that of the 170,000 who are up-to-date with their payments, 35 per cent are paying less than 3 per cent.

This, the FCA says, means that many prisoners would struggle to find a cheaper deal over the remaining term of their mortgage.

Broken down in more detail, 16 per cent of prisoners are paying between 3 per cent and 3.5 per cent interest, 32 per cent between 3.5 per cent and 5 per cent, and 17 per cent of prisoners are stuck paying more than 5 per cent interest.

The paper also shows that 43 per cent of mortgage prisoners are on a capital repayment mortgage, with the rest on interest-only of mixed repayment mortgages.

Of these, 21 per cent of these borrowers have less than £50,000 of payments left, 32 per cent between £50,000 and 100,00, while 47 per cent have yet to pay off more than £100,000.

Meanwhile, the majority of prisoners – 63 per cent – have over 10 years left on their mortgage term, 24 per cent have between five years and 10 years, and 13 per cent have five years remaining.

Credit impairment at origination has also been analysed, and shows that 31 per cent of borrowers were credit impaired when they took their mortgage out, while 37 per cent were not. The status of the remainder is not known.

The FCA says that small and medium-sized lenders have engaged with its implementation group, which has been set up to help with the modified assessments (see link above), but there has been “disappointingly little interest or engagement from the major mortgage lenders.”

It concludes that around 14,000 mortgage prisoners would be able to make “a meaningful saving” should they switch products.

UK Finance chief executive Stephen Jones comments: “These figures help provide much needed clarity for both customers and lenders confirming that, as per the regulator’s previous estimates, around 14,000 eligible customers will likely meet the lending criteria and stand to make a meaningful saving.

“Given this number of borrowers, there will be a limited number of firms who, dependent on risk appetite, will be able to develop new products to meet their needs.

“As these figures show, there is still a large number of customers of inactive firms who will not be helped by the new rules and the regulator recognises that many of these customers will also currently sit outside its protection. We therefore urge the government to ensure that all customers, regardless of owner, are treated fairly.”