Mortgage Prisoners and Vulture Funds

A Backbench Business debate on a Motion on Mortgage Prisoners and Vulture Funds has been scheduled for Thursday 6 June 2019. The debate was initiated by Charlie Elphicke MP, who made representations to the Backbench Business Committee on 30 April 2019.

Mortgage prisoners are customers who are on a relatively high mortgage reversion rate (the interest rate payable when the introductory rate ends), but who cannot move to a better mortgage deal. For most this is due to changes in affordability rules following the financial crisis. In 2016, the Financial Conduct Authority (FCA) estimated that there were 140,000 mortgage prisoners.

The FCA began a review of the mortgage market in 2016. Its interim and final reports noted the problems faced by mortgage prisoners.

On 26 March 2019 the FCA launched a consultation on rule changes that aim to enable mortgage prisoners to move to a better deal. It is proposing to amend responsible lending rules and guidance so that mortgage lenders can choose to undertake a modified affordability assessment where the consumer:

·         has a current mortgage;

·         is up to date with their mortgage payments;

·         does not want to borrow more, other than to finance any relevant product fee or arrangement fee for that mortgage;

·         is looking to switch to a new mortgage deal on their current property.

The consultation on these changes will close on 26 June 2019, with a decision being announced later in 2019.

The Government has welcomed the FCA’s work in this area.

Further information

Inquiry into Mortgage Prisoners: launch, All Party Parliamentary Group on Mortgage Prisoners, 30 May 2019

Hope for ‘mortgage prisoners’ as MPs and regulator act to free them, The Guardian, 25 May 2019

Seema Malhotra and Charlie Elphicke: Action needed to help ‘mortgage prisoners’, Politics Home, 14 May 2019

Banking (Consumer and Small Business Protection) Bill 2017-19 – Ten Minute Rule Bill

It’s time to set the mortgage prisoners free, by Charlie Elphicke MP, ConservativeHome , 7 May 2019

‘Mortgage prisoners’: FCA proposes a regulatory key to the cell door, Hogan Lovells, 3 April 2019

‘Mortgage prisoners’ given help by City regulator, BBC News, 26 March 2019

FCA acts to help mortgage prisoners, Financial Conduct Authority, 26 March 2019

Trapped by My Mortgage, BBC Panorama, 22 October 2018

All Party Parliamentary Group on Mortgage Prisoners 

Recent news on this issue [Intranet] 

Recent parliamentary proceedings [Intranet]