Until recently, many participants believed they were entirely alone in their experiences.
However, their accounts illustrate an increasing recognition of a shared “situation”, enhanced by the UK mortgage prisoners Facebook group and growing attention from government, regulators, and the media.
Conclusion
Sparkes said the definition of mortgage prisoners matters as it influences whether blame is directed towards those in arrears or the consequences of regulatory measures.
He argued the FCA’s definition might explain why there is little sign the regulator, or the UK government, are taking the necessary steps to address the issue.
The FCA defines mortgage prisoners as borrowers who are up to date with their payments, but cannot switch to a different lender or product.
“The consequences of this policy stasis are exacerbated by the year; more of those on closed book loans are falling into arrears due to immediate exposure to interest rate hikes,” Sparkes added.
Sparkes concluded by saying the findings reiterate that the obligation remains on the UK government to correct a problem of its own making.
In response, a HM Treasury spokesperson said: “The government understands the difficulties faced by borrowers who were not able to switch to a new mortgage deal.
“We have updated mortgage lending rules, removing the barrier that prevented some mortgage prisoners from being able to switch, and introduced significant financial and legal protections for those most in difficulty.
“We continue to work with the Financial Conduct Authority and the sector on this issue and will carefully consider practical and proportionate solutions put forward.”
tom.dunstan@ft.com
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