Lord slams Government for letting time 'slip by' without helping mortgage prisoners
The Government has been criticised in the House of Lords for letting "the months and years slip by" without providing a solution for mortgage prisoners.
The issue of mortgage prisoners - those who are unable to access the competitive mortgage market - was debated in the House of Lords earlier this week, and questions were asked about what is being done to help them.
But during the debate Labour Lord Davies of Oldham said there was "precious little in the way of a solution" being offered.
Who are 'mortgage prisoners'?
Mortgage prisoners are those who've been told they 'can't afford' to remortgage even though they are keeping up with their payments and want to switch to a CHEAPER rate.
An EU rule called the Mortgage Credit Directive means – at least in the UK's interpretation – anyone applying for a mortgage is subject to strict affordability checks scrutinising their income and outgoings, even if they already have a mortgage and are now applying for a cheaper one.
MoneySavingExpert has been fighting to help mortgage prisoners for several years now – Martin criticised the directive back in 2015 in his blog: I'm taking on the EU Mortgage Credit Directive – it's going to create many mortgage prisoners.
Back in May, a report from the Financial Conduct Authority (FCA) pledged to help 30,000 of these mortgage prisoners who are with lenders that are authorised to offer mortgage products. But it also estimated that there were 120,000 more people who couldn't get a cheaper deal than the one they're currently on because they have a mortgage which has been sold to a firm doesn't offer new deals.
What was said in the House of Lords?
Liberal Democrat Lord Sharkey submitted a question to the House of Lords asking what action the Government intended to take to ensure that those holding mortgages sold after the 2008 financial crisis to Cerberus - a firm that doesn't offer new mortgages - receive a fair deal, and are able to access good value fixed rate mortgages.
Lord Bates, Minister for International Development said: "The Government believe that better deals should not be beyond the reach of customers who continue to pay their mortgage. The Treasury is working closely with the Financial Conduct Authority (FCA) and industry to explore what options are available to help customers with inactive lenders."
He also later added: "We have tried to find how we can help that situation. We are working with the FCA—we are aware of the representations being made—and will continue to do so. My honourable friend the Economic Secretary to the Treasury will be writing further on this important issue."
But Lord Davies of Oldham was highly critical of Lords Bates' response, saying: "My Lords, the months and years slip by. The Minister says that every constructive effort is being made, but there is precious little in the way of a solution to this problem for these mortgage holders.
"When a question involves a number of people in considerable difficulty and relates to difficulties with the banking and mortgage sector over a decade, it behoves the Minister to produce a better response than that we are looking four or five years ahead before we have made even a significant gesture."