Campaigners For Mortgage Prisoners Pen A Strong Letter To PM Boris Johnson
31 Jan 2020
Approx Reading time: 3 minutes
- The open letter has asked for the Prime Minister’s attention to the mortgage debt problems being faced by thousands in the UK.
- The letter comes after a meeting between UK Mortgage Pensioners campaign group and Treasury’s economic secretary did not satisfy the former about adequate action on the government’s part.
Thousands of UK citizens are trapped in expensive mortgages signed before the financial crises when rates were high, mostly because their lenders don’t offer remortgage services and banking institutions have high affordability requirements. An open letter has been written by the UK Mortgage Pensioners, a campaign group that represents mortgage borrowers in the UK, to the British Prime Minister Boris Johnson asking for relief for the so-called ‘mortgage prisoners’ who are facing a difficult time at the hands of lenders. In the letter, campaigners have requested the current government to provide solutions to the mortgage trap being faced by thousands in the country, more specifically in the upcoming Budget speech to be delivered by the UK chancellor in March. Rachel Neale, who is the lead campaigner for this cause, recently had a meeting with John Glen, the Treasury’s economic secretary, to discuss a possible solution that would allow people to get out of high-cost mortgage debt arrangements that were signed at a time of lenient lending regulations, prior to the financial crises. According to reports, many mortgage agreements entered during this time were later sold to unregulated companies, ones that don’t have the facility of offering new loans. At a press conference held after Neale’s meeting with the secretary, the campaigner expressed her frustration over the meeting, describing how the secretary had redirected all issues expressed by the campaigners towards either the FCA or the FOS. According to her, the secretary’s interest was more focused on the legal proceedings started by the campaigners, and less on discussing a solution to the ongoing problem. However, in a tweet, Glen expressed a different opinion about the meeting’s outcome, stating that issues being faced by mortgage prisoners were discussed in the meeting, including solutions that could recommend changes to be made in existing rules. Glen also stated his commitment to collaborating with the FCA as well as banks with respect to this problem. Some changes
have already taken effect, however, campaigners believe they are not entirely effective. In October, the affordability rules were relaxed with the hope of allowing many borrowers the chance to switch from their non-bank and/or inactive lenders. The changed rules stated that lenders could modify their affordability requirements if the borrower was remortgaging an existing loan for the same amount, held a mortgage that was updated, continued making timely payments in the 12 months prior to filing the remortgage application, and the new loan would carry a smaller interest rate. However, as per an analysis conducted by the FCA into the impact of the changed rules, this change was likely to benefit only 14,000 mortgage prisoners. According to Neale, the government needed to enact more drastic changes, and in case the Treasury secretary was unwilling to cooperate, more senior government officials would need to be involved in the matter.