Mortgage prisoners are those who have been impacted by significantly high rates due to circumstances out of their control. Many have been unable to leave their current lenders due to these becoming inactive or unable to authorise new products. The issue is an historic one, but surged as a result of the 2008 banking crisis, which impacted many providers and their customers.
It was the first to implement modified affordability rules in September 2020, but wants to see more support across the sector.
Jonathan Westhoff, the West Brom’s Chief Executive, said: “Since launching our products to support mortgage prisoners, we’ve been pleased with the borrowers we’ve been able to help so far, with some borrowers saving up to £700 on their monthly payments.
“Whilst the experience has been positive, we have always accepted that the West Brom can only do so much to help borrowers caught in this situation and have called on other lenders for further support.
“Irrespective of the response, we still feel that far too few of these borrowers have been alerted to the opportunity to reduce dramatically their monthly mortgage payments.
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“The FCA has recently announced a review of the situation and is engaging with industry and stakeholders to determine what needs to happen next to help these borrowers.
“We will be involved in this process and are strongly supportive of finding ways to have more borrowers benefit.”
Mr Westhoff said West Brom encourages those who are in “mortgage prison” to contact them to see if they are eligible for a switch.
This is due to affordability rules being modified, which could help those who previously hit brick walls.
West Brom has recently reduced its rate eligible to these borrowers down to 1.89 percent, which it states is better than many rates offered by inactive lenders.
One borrower who took advantage of the offer from West Brom was Maurice Latimer, who was impacted by the collapse of Northern Rock in 2008.
After switching to West Brom, he was able to half his mortgage payments from £886 to £401.
Mr Latimer said: “For years I just got letters saying what was happening by whoever was in charge of my mortgage and I basically had no say – I was passed round like a parcel.
“I’d tried to switch deals before, but I knew it was a waste of time because of the strict affordability checks. I couldn’t get anything until the West Brom came along.
“Before this saving for me and my wife, the freedom to do what we wanted with our money was gone. I reckon I’ve paid £10,000s more than I should have, and it’s nothing to do with me – it’s not my fault at all.”
The FCA review is hoped to be a significant step into helping those who have been affected by higher rates due to inactive lenders.
Both the watchdog and the Government have pledged continual commitment to finding options for those stuck in this situation.
A joint statement said they would work together with “input and support” from regulators to find an appropriate solution.
Government has also pointed mortgage prisoners towards the Money Helper website, which offers guidance for individuals impacted.
The group UK Mortgage Prisoners has welcomed the review by the FCA, and has been invited to meet with the watchdog as part of the latest investigations.
But it has also expressed “huge reservations” about the outcome, and whether tangible change will be reached for those impacted.
Rachel Neale, lead campaigner at UK Mortgage Prisoners, expressed the group’s aims, and said: “We are now calling for a Government backed Mortgage Guarantee Scheme, similar to that already offered to First Time Buyers, and a product that sees all mortgage prisoners helped back in to the mainstream mortgage market, regardless of the narrative that now surrounds their circumstances.
“The circumstances are no longer relevant when homeowners have suffered prolonged exposure to crippling interest rates for almost 15 years because their mortgage was sold on without protections by an irresponsible Government.
“We have been shut out of the market and put in this position through no fault of our own and without our consent.”
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