The Bank of England (BOE) hiked interest rates for the seventh consecutive earlier today from 1.75 to 2.25 percent, a decision which will mean mortages become more expensive. Today’s base rate decision is the largest hike in 14 years leaving around quarter of a million (250,000) British homeowners stuck with their mortgage deal because their administrators have become inactive or unable to authorise new products.
The UK Mortgage Prisoners Action Group said mortgage prisoners have suffered more than a decade of crippling variable rates since the last global financial crisis in 2008.
Many took out their loans with lenders that had to be rescued during the financial crisis such as Northern Rock and Bradford & Bingley.
Sand have since had tince, their mortgages have been sold on to another provider.
Now, campaigners are calling on the Government to step in before more people lose their homes.
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A spokesperson said: “We have been left paying over inflated rates for well over a decade whilst the majority of the population were being allowed to benefit from access to fixed rates of between 1 to 2 percent or thereabouts.
“These administrators of our mortgages are slow to pass on reductions when base rates are dropped and most only began this due to covid, yet there is no intervention to prevent them being allowed to continue to rip us off if base rates go up by immediately passing on these rises without justification.”
The spokesperson said people who have pre crash mortgages should not be subjected to increases when there is no extra cost to administer.
They added: “We continue to be ignored by Government who have failed us by not considering the repercussions of a Mortgage Market Review following the GFC and by not considering the implications of regulatory affordability changes.
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“Therefore, they left us open to profiteering when they sold our mortgages to non lenders who made ineffective promises. We cannot continue to lay out the same arguments repeatedly with little response.
“People are losing their homes, suffering from chronic stress, physical and mental ill health due to the pressure of the interest rate rises and the cost of living.”
They continued: This cannot be allowed to continue. We have members who share their personal stories with us, many tragic, after enduring years of financial trauma leading to vast detriment, family breakdown, mental and physical illness, existing rather than living all while their neighbours who chose another Lender have lived full lives on low fixed rates.
They continued: “We have no resilience left. Certainly not to withstand a crisis on top of the crisis we have endured.
“These are real people, often too broken to even tell their stories. The shameful creation and treatment of mortgage prisoners has gone on too long.
“Mortgage prisoners are among the most vulnerable people in the country.
“Not only are there many with ill health, disabilities, poor mental health brought about by stress, but we have had our own a cost-of-living crisis for well over a decade.”
While it is estimated there are 250,000 mortgage prisoners across the UK, a recent report by the Financial Conduct Authority (FCA) has found there could be much more.
Meanwhile, one lender is doing its best to help mortgage prisoners and has launced a product to help them save money.
Jonathan Westhoff, Chief Executive of West Brom, 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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