And while the financial regulator – the Financial Conduct Authority (FCA) – has adopted policies to help mortgage prisoners, it has now reached the limit of its powers in this area. This means only the Government can, and should, free mortgage prisoners, and the report sets out several possible actions it could take to solve the problem.
Martin: ‘There is a moral responsibility to free mortgage prisoners from their penury’
MoneySavingExpert.com founder Martin Lewis, who funded the LSE research, said: “Mortgage prisoners are the forgotten victims of the 2008 financial crash. The Government at the time chose to bail out the banks, but unfairly – immorally – hundreds of thousands of their victims were left without adequate help, trapped in their mortgages and the financial misery caused by it. And they have been forgotten ever since.
“The Prime Minister has touted the idea of subsidising 5% deposit mortgages for first-time buyers. Alongside that, there is a moral responsibility to release money to free mortgage prisoners from their penury. I was delighted when Treasury Minister John Glen agreed in advance to review any policy proposals the LSE came up with. The independent, practical solutions in this report leave no excuse for not tackling this, though as an urgent first step, the Government must agree to do the remedial work, using critical data it has access to, to cost the solutions up fully.
“Speed is necessary now, as coronavirus has torn through people’s livelihoods. But for people whose finances and freedom have already been destroyed for more than a decade, they had already met breaking point – they are now defeated. Nobody should underestimate the detriment to people’s lives and wellbeing if the Treasury doesn’t act, and act soon. Intervention can and will save lives.”
What are its solutions to free mortgage prisoners?
In its report, the LSE has put forward eight practical policy solutions to free mortgage prisoners.
However, only the Government and financial regulator have access to data on UK borrowers to calculate the cost of the proposed measures accurately. The LSE and MSE are now urgently calling on the Government to use this data to assess the full cost and benefits of the proposals.
Here are some examples of the proposed measures:
Rachel Neale, from the UK Mortgage Prisoners group, which campaigns for mortgage prisoners, said: “UK Mortgage Prisoners would like to thank Martin Lewis for funding the research and researchers at LSE for their attempts to find solutions. It is now abundantly clear that borrowers were ‘not to blame’ for taking out mortgage products with ‘household names’ such as Northern Rock and Bradford and Bingley. The responsibility lies largely with ‘successive Governments’.
“The financial and emotional harm sustained for over a decade has been devastating for mortgage prisoners. These consequences are well known by the Government; therefore it is now time to find a fair and ethical solution for all mortgage prisoners.”
This content was originally published here.