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House of Lords votes in favour of interest rate cap for mortgage prisoners

The House of Lords has voted in favour of an amendment to the Financial Services Bill, which could see interest rates capped for certain mortgage prisoners. But the House of Commons needs to approve the change before it can take force.

The mortgage prisoners that the amendment aims to help have uncompetitive mortgages with inactive lenders or unregulated firms, often having been sold on to various investment companies after the 2008 banking crash. Those who have a mortgage with an inactive or unregulated firm often cannot remortgage because they don't meet strict borrowing criteria, even though they'd often be paying less if they switched. and our founder Martin Lewis have campaigned for years for more help for those who are stuck.

On Wednesday (14 April), the House of Lords voted in favour – by 273 votes to 235 – of an amendment to the Financial Services Bill to help mortgage prisoners. The amendment had been suggested by the All-Party Parliamentary Group on Mortgage Prisoners and was tabled by Liberal Democrat peer Lord Sharkey.

Although the House of Lords has voted in favour of the amendment, it's not guaranteed it'll become law, as the House of Commons will now also need to vote on it. A similar amendment was debated on but not taken forward by the Commons earlier this year. If you want your MP to support the amendment in the Commons, you can contact them using the details on the UK Parliament website.

The amendment would cap mortgage costs for some prisoners 

The amendment to the Bill would bring in a cap on the standard variable rate (SVR) of interest for mortgage prisoners in 'closed books' - ie, those borrowing from a firm which no longer lends to new customers. The proposed cap is no more than 2% above the Bank of England base rate (currently 0.1%).

'A good stopgap – but long-term solutions are urgently needed'

Martin Lewis, founder of, said: "I am delighted that the Lords has seen the injustice that has been heaped on 100,000s of mortgage prisoners. 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 this causes. Coupled with the devastating impact of the pandemic on people's finances, the vote from the Lords is right to push for urgent action to prevent the situation from becoming catastrophic.

"The independent LSE report I funded has a cogent argument as to why an SVR cap isn't a balanced long-term solution. But 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 – so this vote is an important move. 

"And while it will be tough to get the Commons to enact it against Government wishes, at the very least it ramps up pressure on the Government to come up with alternative solutions at speed, which Rishi Sunak promised me on the record that he would do."

The amendment would also require lenders to ensure that new fixed interest rate deals are available for mortgage prisoners who:

  • Are up to date with payments or have only missed one monthly payment in the past 12 months,
  • Have a remaining term of two years or more,
  • Have an outstanding loan amount of at least £10,000, and
  • Have not received consent to let the property.

During the debate various peers, including the Labour peer Baroness Bryan of Partick and Conservative peer Baroness Noakes, referenced research from an LSE report on mortgage prisoners funded by Martin, which the Chancellor has also described as "informative" in an interview with Martin. In the same interview Rishi Sunak agreed that there was a need to "make sure we have workable solutions" to help all mortgage prisoners. 

Lord Sharkey also cited during the debate an earlier statement Martin had made on the urgency of the issue, where Martin said: "This [rate cap] would provide immediate emergency relief to those most at risk of financial ruin. No one should underestimate the threat to wellbeing and even lives if this doesn't happen, and happen soon."

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