Martin Lewis is urging the government to do more to help ‘mortgage prisoners’ who have been stuck on high-interest rates since the 2008 financial crisis.
The call comes a year after a report outlining a solution to the problem was published, but is yet to receive a response from the government.
As explained by the Money Saving Expert website, mortgage prisoners are people who borrowed money for a home loan, but were sold by the government to ‘closed book’ inactive lenders, who are not regulated to lend new mortgages. Many of these companies were large investment firms, which made it difficult for homeowners to move to cheaper rates.
Martin Lewis explained mortgage prisoners have suffered for more than a decade, and more needs to be done to help. According to the figures, near-monthly rises have seen some prisoners’ rates leap from 4.5% to as much as 8.29% in the past, which has caused immense financial, physical and mental stress.
Martin Lewis funded the £ 60 million report researched by London School of Economics and Political Science to come up with costed solutions to help prisoners eventually remortgage with active lenders.
Some of the solutions included providing free comprehensive financial advice for all prisoners, interest-free equity loans to clear the unsecured element of Northern Rock’s ‘Together’ loans and government equity loans on the model of Help to Buy, interest-free for the first five years.
But the in-depth report is yet to receive a response from the government.
This week, Seema Malhotra MP and Lord Sharkey, co-chairs of the All Party Parliamentary Group (APPG) on mortgage prisoners, wrote to economic secretary to the Treasury Bim Afolami MP to ask when the Government will be responding, and to invite Mr. Afolami to a meeting with the group.
Andrew Griffith MP (Mr. Afolami’s predecessor) confirmed in March 2023 that he would read and seek official advice on the proposals put forward in the report – but there’s been “no response from the Government” since then, the APPG said.
Martin Lewis, who funded the report and is the founder of MoneySavingExpert, said:
“This report lays out starkly that the state sold these borrowers into poverty, knowing it could cause them harm, and made billions doing it.
“The result has destroyed lives. People have been left in financial, physical and mental misery, exacerbated by the pandemic and cost of living crisis ripping through their already dire situations.
“When we put solutions to the Treasury in the past, it said it wanted to look at them, but couldn’t as they weren’t costed. Now, having fought tooth and nail to get some of the data needed from official institutions, it is costed. The government has a moral and financial responsibility to mitigate some of the damage done.”
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