‘Urgent action’ needed to help mortgage prisoners

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Mortgage prisoners trapped in arrangements with current lenders will struggle to make repayments after today’s Bank of England rate hike, campaingers have warned. The Bank of England (BOE) hiked interest rates for the tenth consecutive time earlier today from 3.5 to 4 percent, a decision which will mean many people’s mortages will become more expensive. 

A spokesperson fo rthe UK Mortgage Prisoners Group said: “We cannot overstate the disastrous impact of a 10th base rate rise on their members who are suffering intolerable stress in the face of unaffordable high payments charged by profiteering vulture funds.

“The majority of borrowers in the active market are understandably deeply worried about coming off low fixed rates onto other fixed rates of around 5 precent.

“However, rates around 5 percent were what UK Mortgage Prisoners have been trapped on for almost 15 years after the sell off of our mortgages, from Northern Rock and other banks who failed in the Global Financial Crisis of 2007 to 8, and were rescued by Government who permitted non lenders, such as the infamous Cerberus, to buy our mortgages and offer no other products or rates.”

Following today’s announcement the Bank of England is increasing interest rates further, mortgage prisoners could be faced with average rates of 8.14 percent the campaigning group has warned.

The spokesperson added: “Mortgage Prisoner mortgage administrators trapped our members on these high variable rates during a decade of historic low interest rates we were not able to benefit from.

“As the base rates have risen over the past year these rises have been passed to mortgage prisoners and the outcome is that after today’s announcement, our average rate will be an unsustainable 8.14 percent.

“UK Mortgage Prisoners, who took their mortgages before the stringent revision of lending regulations post-Crash, who spent a decade being told they “Can’t afford to pay less” have been landed with payments far in excess of so-called affordability, with no forbearance.”

Furthermore, campaigners said there has been a “deafening silence” from the FCA on help for Mortgage Prisoners and some could now be faced with having to sell their homes or have them reposessed.

The spokesperson added: “It is an absolute travesty of justice which should never have been allowed to happen and for which significant impetus from government and regulator should have been forthcoming long since.

“Once again, we call for urgent action from both parties and in response to our request for a meeting with the current Economic Secretary to the Treasury.

“Our story is incredulous and a massive blot on the UK Mortgage industry record.”

Although it is estimated there are 250,000 mortgage prisoners across the UK, a recent report by the Financial Conduct Authority (FCA) has found there could be much more. 

More than 750,000 households are at risk of mortgage default following today’s announcement that the base rate has risen to four percent today, according to the Financial Conduct Authority (FCA).

Today’s rise – an increase of 0.5 percent – puts the Bank of England’s interest rates at its highest level since the 2008 financial crisis.

Following the hike, the average mortgage borrower can expect to pay an extra £52 per month.

Those who have been on a variable rate since the start of the series of hikes, they could be paying an extra £430 more per month when compared to December 2021.

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