The APPG on Mortgage Prisoners has written to the Chancellor to request that he invites lenders holding mortgage prisoners on high Standard Variable Rates to his mortgage summit. For example, Landmark has increased their SVR to 8.64% and refuses to offer mortgage prisoners fixed rates. There are 195,000 customers with inactive lenders like these and some rates are now approaching 10%/12%.
We want mortgage prisoners to be offered the full range of forbearance options and contract variations and we hope the Chancellor will make this request to the inactive lenders. The Government sold off billions of pounds of mortgages to these firms and we feel the Government has a responsibility to ensure that appropriate options are offered to these customers and that they are able to access fixed rates..
There are currently major loopholes in the FCA guidance as whilst it lists a number of options lenders "may" offer, it doesn't actually require lenders to offer any help to customers. For example, lenders can refuse mortgage term extensions, switches to interest-only and access to fixed rates, even if these would be the best options for customers.
The Rt Hon Jeremy Hunt MP
Chancellor of the Exchequer
HM Treasury, 1 Horse Guards Rd
London SW1A 2HQ
Dear Chancellor
We have read your tweet indicating that you will be inviting executives from the major mortgage lenders to a summit in Downing Street to discuss the help they can offer to customers struggling with their mortgage payments. We hope you can confirm that you will be inviting senior executives from Landmark Mortgages, Topaz Finance (trading under a variety of names including Heliodor Mortgages) and Engage Credit to meet with you.
As you will be aware, the Government (through UK Asset Resolution) sold mortgages to these firms and we feel the Government has a responsibility to ensure that appropriate options are offered to these customers and that they are able to access fixed rates. These mortgage prisoners, sold on by the Government, are trapped on very high Standard Variable Rates. For example, Landmark has increased their SVR to 8.64% and refuses to offer mortgage prisoners fixed rates. There are 195,000 customers with inactive lenders like these and some rates are now approaching 10%/12%.
The APPG believes that is important that mortgage prisoners have access to the full range of forbearance options and contract variations if they are struggling with their mortgage payments. As the APPG on Mortgage Prisoners has pointed out to the FCA, there are significant loopholes in the current FCA guidance as whilst it lists a number of options that mortgage lenders “may” offer it doesn’t actually require lenders to offer support to customers. For example, we are aware that many lenders to mortgage prisoners refuse any and all requests to be able to access new deals, interest rate switches or fixed interest rates. Lenders are also able to refuse requests for term extensions or temporary switches to interest-only payments, even if these are the most appropriate options for customers. Unfortunately, the FCA refused our request to close these loopholes in the guidance.
We hope you will be able to confirm that representatives from the firms listed above will be invited to meet with you and that you will request that they offer the full range of forbearance options and contract variations in the FCA guidance and allow mortgage prisoners the ability to access fixed rates.
Kind regards
Seema Malhotra MP
Lord Sharkey
Co-Chairs of the APPG on Mortgage Prisoners