When it comes to the plight of Britain's mortgage prisoners, Scottish National Party MP Martin Docherty-Hughes said he has campaigned strongly to help them, knowing "I could have been one myself".
Speaking on the FT Adviser editor's podcast, Dochtery-Hughes said he and his husband had, just before the financial crisis, taken out a high loan-to-value mortgage with Northern Rock, as "the only way to get on the housing ladder".
They happened to be in the process of moving their mortgage just before the lender failed.
He said: "Just like that that old saying - 'there but for the grace of God' - it certainly could have been us sitting in a house, not able to move on."
According to the Financial Conduct Authority, there were an estimated 166,880 mortgages in closed books, representing 2 per cent in 2023, down from 275,000 in 2022.
According to the FCA’s definition, over 40,000 of these were mortgage prisoners; others in the larger figure may not be able to move because of various reasons, including falling into arrears or having no benefit in moving.
While this does not sound like a huge proportion of the UK adult population, there have been worries this number is expected to increase in the coming years as interest rates rise and house prices fall.
There some things that can be done to help mortgage prisoners, including:
- Loan modifications
- Refinancing
- Short sales
- Foreclosure.
But not all of these will be practical for individuals whose financial or physical and mental situations disbar them from cutting their losses and starting again.
A spokesperson for the Mortgage Prisoners campaign group told FT Adviser that even when the closed book element of consumer duty comes into force this year, nothing much might change.
They said: “They will obviously try and get some way around it by saying the likes they offer advice to speak to debt adviser, Maps or you are free to move to another lender at any time, which is their go to statement when quizzed.
"But it would be interesting for them to be scrutinised as to how the consumer duty will affect them when they do not offer fairer, affordable mortgage products."
Dochtery-Hughes said when a constituent came to him, and he started to investigate the mortgage prisoner problem, he was "scandalised" by the scale and the impact on people across the UK.
Some people have had to take up two or three jobs, sometimes paying 12 per cent to 15 per cent above other mortgage rates on the market, on top of all the costs of running a household, he said.
"Contrary to popular opinion, mortgage prisoners are not defaulting on their mortgage or bad at what they do. They are keeping their heads above water.
"Also if they could have downsized, they would have done. They are locked into these properties - hence, 'mortgage prisoners'."
