The House of Lords has voted in favour of capping the standard variable rates (SVRs) charged to mortgage prisoners.
Earlier this week (April 14) 273 members voted in favour of an amendment to the Financial Services Bill, which would require the Financial Conduct Authority to introduce a SVR cap for mortgage prisoners and ensure their access to fixed rate deals under specified circumstances.
Meanwhile, 235 members voted against the amendment.
The bill, which originated in the Commons, will be sent back after its third reading in the Lords for consideration of Lords amendments.
A statement from the UK Mortgage Prisoner Action Group read: “The successful vote has brought immense relief to our members with renewed hope that their plight might finally be resolved.
“Implementing an SVR cap for closed book, inactive entities will bring an immediate end to the emotional, mental, and financial hardship and economic immobility that mortgage prisoners have faced for over a decade.”
Mortgage prisoners are customers who have previously been unable to switch mortgages despite being up-to-date with their payments.
Martin Lewis, founder of MoneySavingExpert, commented: "Mortgage prisoners have been left paying obscene interest rates for over a decade, through no fault of their own. They have been completely trapped in their mortgages and unable to escape the financial misery this causes.
“Coupled with the devastating impact of the pandemic on people's finances, the vote from the Lords is right to push for urgent action to prevent the situation from becoming catastrophic.”
The vote in the Lords comes after the All Party Parliamentary Group on Mortgage Prisoners last year called for the introduction of a cap on SVRs to prevent mortgage prisoners from being "exploited".
A report published by the London School of Economics and Political Science last year argued that the government had a ‘moral responsibility’ to “free” mortgage prisoners and that the regulator had likely “reached the end” of what it could do.
chloe.cheung@ft.com
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