Martin Lewis: Urgent action needed to prevent further mortgage prisoners
Urgent action is needed in order to prevent more mortgage prisoners as a result of the pandemic, according to Martin Lewis, founder of MoneySavingExpert.
Lord Stevenson is set to table an amendment to the Financial Services Bill 2019-21, which would introduce a cap on the standard variable rate of interest that mortgage prisoners trapped in closed books are forced to pay.
The proposed cap is no more than 2% above the Bank of England base rate.
Lewis said: “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 it causes.”
Lewis went on to say that the impact of the pandemic on people’s finances means that urgent action is needed to prevent the situation from becoming catastrophic.
He said: “The independent LSE report I funded has a cogent argument as to why an SVR cap isn’t a balanced long-term solution.
“Yet 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, and I’m very happy the APPG on mortgage prisoners is pushing it.”
He believes this would provide immediate emergency relief to those most at risk of financial ruin.
Lewis added: “No one should underestimate the threat to wellbeing and even lives if this doesn’t happen, and happen soon.”