Mortgage prisoners in London are being hit the hardest due to holding larger loans, Trussle has found.
People stuck on a top six lender’s standard variable rate (currently 3.85%) in the capital typically pay £9,400 annually, while those in the South East (£6,500) and East (£5,600) also face a sizable outlay.
In London mortgage prisoners typically have an outstanding mortgage of £243,200 – though the cost of annual payments would be reduced to £2,800 if they could take out a 2-year fix with a top six lender.
The cheapest place to be a mortgage prisoner is in the North East, where average loan amounts of £78,600 mean they are typically paying £3,000 per year.
While London mortgage prisoners have higher incomes they still pay more interest as a percentage of average disposable income.
Ishaan Malhi (pictured), chief executive and founder of Trussle, said: “For borrowers based in London, the southeast, and east of the UK, the annual interest payments can be absolutely crippling.
“While some lenders do offer help to mortgage prisoners, too many are in effect holding these borrowers to ransom, while they collectively lose around £13m per day in excess interest. This needs to change urgently.
“Our recent Mortgage Switch Guarantee proposals call for a new set of industry standards to be implemented to help borrowers on SVRs switch mortgage.
“One of the key proposals recommends that all lenders have some form of duty-of-care to their customers, possibly in the shape of offering a range of relief options to mortgage prisoners.
“Whether this takes the shape of a payment holiday when it’s clear a borrower can’t afford their payments, or an obligation for lenders to refinance mortgage prisoners who meet certain criteria, it’s clear that addressing this issue is more urgent than ever.”