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Inquiry into Mortgage Prisoners

The All-Party Parliamentary Group (APPG) on Mortgage Prisoners has published a call for evidence for its inquiry into mortgage prisoners. The APPG is particularly interested in hearing from mortgage prisoners about their situation and what changes they would like to see introduced.


Seema Malhotra MP, Co-Chair of the APPG on Mortgage Prisoners said:

“Mortgage prisoners have paid thousands of pounds more in interest and some face losing their homes, leading to stress, ill-health, depression, relationship breakdown and damage to their businesses and credit records. More than anything, they told us how frustrating it is to be paying 5% or 6% and be told that you cannot “afford” a mortgage which would halve your interest rate and reduce your mortgage payment significantly. The APPG will be examining what changes need to be introduced by lenders, the Government, UKAR and the FCA to ensure that all mortgage prisoners are treated fairly and get a fair deal.”

Submissions can be made by email:


Updates are available at:



A mortgage prisoner is someone stuck with their existing lender and cannot switch. This means that they can find themselves stuck on a high Standard Variable Rate. Mortgage prisoners can find themselves in this situation if their bank or lender decides to stop offering them new deals (an inactive lender). They can also find their mortgages sold on to another organisation which is not authorised to lend (an unregulated firm). The largest group of mortgage prisoners are former customers of Northern Rock and Bradford & Bingley which were nationalised by the Government, with packages of mortgages then sold on to unregulated firms like Cerberus.

The FCA estimate that changes to the affordability test will help many mortgage prisoners switch, with the FCA estimating that 45,000 to 65,000 customers of the 140,000 with unregulated and inactive lenders will be able to do so and will benefit from switching. But, even in the regulators high switching scenario only 20-30,000 will actually switch lender. This will still leave many who will not be able to switch to mainstream lenders and the APPG will be examining:

  • How the reforms to the FCA affordability test can be made as wide as possible and communicated clearly to allow as many mortgage prisoners as possible to switch.

  • The protections which need to be in place to ensure fair treatment and fair deals for the mortgage prisoners who cannot switch.

    • The scope of the FCA’s regulation and the specific principles, rules and guidance in place and the supervision of lenders by the regulator.

    • Safeguards which should be put in place when mortgages are sold by UK Asset Resolution and other private sector organisations


Questions on which the APPG is seeking views:

The APPG is particularly interested in hearing from mortgage prisoners concerning, their situation, their current lender and interest rate, their type of mortgage, how being a mortgage prisoner has affected them and their families and what changes they would like to see introduced?


The APPG would also welcome evidence from mortgage prisoners, consumer groups, mortgage advisers, lenders and other stakeholders concerning:

  1. What impact has been caused to mortgage prisoners as a result of policy decisions made by the Government, UK Asset Resolution and the FCA?

  2. Are the changes to the affordability rules proposed by the FCA sufficient to ensure that as many mortgage prisoners as possible are able to switch to active lenders?

  3. Do protections for vulnerable consumers need to be strengthened?

  4. What other changes should be introduced to the scope of FCA regulation of mortgage lending?

  5. How effective is the UK Finance voluntary agreement to help borrowers with active lenders switch to a better deal? What gaps exist in the agreement?

  6. What additional rules and support needs to be introduced concerning the treatment of interest-only mortgage customers?

  7. What safeguards and additional protections for customers should be put in place by UK Asset Resolution, the Government and other lenders when selling customers’ mortgages to other organisations?

  8. Why have active lenders been unwilling to participate in the auctions of mortgages by UK Asset Resolution or been unable to bid as much for the mortgages as unregulated and inactive mortgage lenders?

  9. Is there a need for a full public inquiry into the issue of mortgage prisoners?

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