The Mortgage Prisioner Action Group has called for “urgent and sweeping” legislative reforms to mortgages to “avert further homeowner crises”.
As part of its latest campaign, the group focused on mortgage prisoners explaining they are trapped on “predatory reversionary standard variable rates” since the Treasury rescued banks such as Northern Rock in 2008.
It said these individuals have experienced “devastating injustice” that has led to “financial ruin, mental anguish, homelessness, and loss of life”.
To address this, the group issued a list of demands.
Demands
This included ceasing the “mortgage prisoner” cycle which it described as “imperative” to prevent homeowners from being ensnared by SVRs.
The group described SVRs as a trap that can spiral into a life-altering catastrophe, including loss of homes and life savings.
Guaranteeing access to fixed rates was another demand as the group said the plight of mortgage prisoners, currently banned from fair rates, must be “rectified”.
“We must counter the silent epidemic of financial stress-induced mental health issues by restoring equitable lending practices,” it added.
Additionally, it demanded prohibiting non-mortgage holdings, with the reasoning that residential mortgages should “not be pawns in a profit-driven game”.
“Lending reforms must stop the transfer of these mortgages to non-leading entities which leads to economic injustice and social instability,” the group added.
Clarifying mortgage ownership was another demand, with the group stating that transparency in mortgage ownership is a “non-negotiable”.
It explained that borrowers must have the ability to switch rates within financial groups without opaque barriers, preventing a system that facilitates “economic despair”.
The group called for an adaptation to affordability criteria as the post-2008 global financial crash changes to affordability criteria trap pre-GFC mortgage holders in “regulatory purgatory”.
To address this, the group advised that a “Grandfather Policy” must be implemented to avert a “wave of homelessness”, especially among the ageing population.
Meanwhile, to address those who have already been affected, the group is calling for the establishment of a compensation scheme as a mechanism for redress is “critical” to address the financial haemorrhaging of mortgage prisoners.
The group said the situation has reached “crisis point” and demanded “bold legislative reform” to dismantle the mechanisms of “financial oppression”.
It warned without it, the UK may face a national emergency of homeowner displacement and the consequent impact on community stability and mental well-being.
tom.dunstan@ft.com
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