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APPG on mortgage prisoners calls for Cap on Standard Variable Rates in light of Key Worker Survey

  • The APPG on Mortgage Prisoners has written to the CMA and the FCA to call for an immediate investigation into price gouging by unregulated funds and inactive lenders.

  • The APPG is calling for a market wide margin cap of 2% above the Bank of England base rate on all mortgage Standard Variable Rates to be introduced in order to provide immediate and effective relief to hundreds of thousands of homeowners that have been trapped on crippling interest rates for over a decade.

Seema Malhotra MP, Co-Chair of the APPG on mortgage prisoners said “Too many mortgage prisoners have been exploited by being held on high Standard Variable Rates or have seen their rate increased with no justification. The CMA and the FCA should intervene quickly to cap the interest rates being charged. The coronavirus has led to unprecedented strain on family finances and we need to help mortgage prisoners, including many key workers, get a better deal.


Kevin Hollinrake MP, Co-Chair of the APPG on fair business banking said “It is simply unfair that hundreds of thousands of UK individuals, couples and families are locked out of a mortgage market that the rest of us take for granted. Even if lenders were following the new guidance on the affordability test, the FCA admits that this will only help a small fraction of mortgage prisoners. A cap on the SVR is the simplest and quickest way of addressing this injustice.


A similar market intervention was made to protect consumers from price gouging by energy companies, and the APPG believes that the case for intervention in the mortgage market is even more pressing, as the extra costs to any mortgage holder on a SVR will be in the hundreds--even thousands--of pounds per year for every household on an SVR.


  • A customer with a £130,000 repayment mortgage with Heliodor on the SVR of 4.39% will be paying £11,846 a year, compared to £9,967 a year if they could access a good value fixed rate mortgage.

  • A customer with a £120,000 interest-only mortgage with Tulip / Grasmere on the SVR of 4.39% will be paying £5,268 a year, compared to £2,280 a year if they could access a good value fixed rate mortgage.

  • A customer with a £150,000 interest-only mortgage with Mortgage Agency Services on the SVR of 5.35% will be paying £8,025 a year, compared to £2,850 a year if they could access a good value fixed rate mortgage.


At this critical time, with a recession looming, it is imperative that homeowners are not helped by just deferring payments, but with real savings that mean they have extra funds in their pockets to pay other essential bills and support their families.

The recent relaxation of affordability rules put in place to help mortgage prisoners has yet to benefit any of the 250,000 mortgage prisoners, and the current economic upheaval due to Covid 19 means that any hopes of borrowers--particularly mortgage prisoners--remortgaging on better rates quickly is all but extinguished. The only possible avenue is then for a mortgage holder to rely on the options that their current lenders may be able to offer them.


However, for those trapped with unregulated funds and inactive lenders such as NRAM, Heliodor, Landmark and Mortgage Agency Services there is no opportunity for a lower rate. It is unconscionable that hundreds of thousands of homeowners--many of whom bought high-street, prime mortgages from a regulated lender--have all been sold or had their mortgage transferred into a position from which they have no escape.


This has become even more apparent in the light of the Covid 19 pandemic. The recent survey by UK Mortgage Prisoners highlights the catastrophic personal consequences that these rates are having on key workers--many of whom have been risking their lives--that are trapped on high SVRs.


It is time that we say enough is enough and take clear, decisive action to alleviate the ongoing harm that is being inflicted on key workers and other mortgage holders across the country. We cannot applaud their service on the one hand, whilst allowing this level of injustice to continue with the other.


Details of the Standard Variable Rates being paid by mortgage prisoners compared to the SVRs of the largest lenders can be found through this link


The letter sent by the APPG to Chris Woolard (FCA) and Lord Tyrie (CMA) can be found through this link


The UK Mortgage Prisoners key worker report can be found through this link





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