Asked by: Wera Hobhouse (Liberal Democrat - Bath)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what estimate he has made of the number of new mortgage prisoners since September 2022; and if he will make an estimate of the number of mortgage prisoners for each of the next three years.
Answered by Andrew Griffith - Shadow Secretary of State for Business and Trade
Information on the number of mortgage prisoners was provided by the Financial Conduct Authority (FCA) in 2021. A link to that report is provided below.
https://www.gov.uk/government/publications/mortgage-prisoner-review
Asked by: Virginia Crosbie (Conservative - Ynys Môn)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will make an assessment of the implications for his policies of the report by Kath Scanlon, Bob Pannell and Peter Williams entitled Releasing the mortgage prisoners: proposed solutions and illustrative costings, published on 1 March 2023 February 2023; and whether he plans to implement the recommendations of that report.
Answered by Andrew Griffith - Shadow Secretary of State for Business and Trade
The Government understands that being unable to switch your mortgage can be extremely stressful, and, alongside the Financial Conduct Authority and industry, have shown we are willing to act through the introduction of a ‘modified affordability assessment’. We are also regularly in contact with key stakeholders, including recently with the All Party Parliamentary Group on Mortgage Prisoners.
The Government remains committed to this issue, and we are considering the proposals put forward in this report very carefully. While we cannot force lenders to lend to borrowers they consider too high a risk, the Government welcomes any further practical and proportionate solutions that would meaningfully assist affected borrowers and be fair to other borrowers in the wider market.
Asked by: Andrew Gwynne (Independent - Gorton and Denton)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether his Department is taking steps to help support people who took out mortgages before 2008 with regulated banks which subsequently collapsed and are now unable to switch to new mortgage deals.
Answered by Andrew Griffith - Shadow Secretary of State for Business and Trade
The Government understands that being unable to switch your mortgage can be extremely concerning, and, alongside the Financial Conduct Authority and industry, have shown we are willing to act through the introduction of a ‘modified affordability assessment’. We are also regularly in contact with key stakeholders, including recently with the All Party Parliamentary Group on Mortgage Prisoners.
The Government remains committed to this issue, and welcomes any further practical and proportionate solutions that would meaningfully assist affected borrowers and be fair to other borrowers in the wider market.
Asked by: Seema Malhotra (Labour (Co-op) - Feltham and Heston)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, with reference to the LSE report entitled Releasing the mortgage prisoners: Proposed solutions and illustrative costings, published 1 March 2023, what assessment he has made of the implications for his Department's policies of that report's findings.
Answered by Andrew Griffith - Shadow Secretary of State for Business and Trade
The Government understands that being unable to switch your mortgage can be extremely stressful.
The Government has consistently committed to looking for practical and proportionate options where they will deliver genuine benefits for affected mortgage borrowers, and where interventions are fair to borrowers in the active market, and to taxpayers. We will consider the proposals put forward in this very recently published report carefully.
Asked by: Claire Hanna (Social Democratic & Labour Party - Belfast South and Mid Down)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, with reference to the report by LSE London entitled Releasing The Mortgage Prisoners, Proposed solutions and illustrative costings, Final Report, published in February 2023, whether he has made an assessment of the implications for his policies of the findings in that report.
Answered by Andrew Griffith - Shadow Secretary of State for Business and Trade
The Government understands that being unable to switch your mortgage can be extremely stressful.
The Government has consistently committed to looking for practical and proportionate options where they will deliver genuine benefits for affected mortgage borrowers, and where interventions are fair to borrowers in the active market, and to taxpayers. We will consider the proposals put forward in this very recently published report carefully.
Asked by: Patricia Gibson (Scottish National Party - North Ayrshire and Arran)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether he has had recent discussions with Cabinet colleagues on the potential merits of (a) providing support to and (b) bringing forward proposals to help cap mortgage interest rates for people who have been required to pay high standard variable rates since 2008.
Answered by Andrew Griffith - Shadow Secretary of State for Business and Trade
The cohort of borrowers referred to in this question are so-called mortgage prisoners. The Financial Conduct Authority’s (FCA) review into mortgage prisoners, published in November 2021, found that the population of mortgage prisoners is varied and complex. There is no single measure to address all of the circumstances this population of mortgage holders face.
The Government has worked with the FCA to implement changes to its mortgage lending rules, removing the regulatory barrier that prevented some customers, who otherwise may have been able to switch, from accessing new products. Any further work on this issue must consider the practicality of solutions and their effects on the wider mortgage market, including the resilience of firms and fairness to other borrowers.
A cap on the Standard Variable Rates (SVRs) charged by inactive firms would be an unprecedented market intervention and would undermine the principle of risk-based pricing that underlies the mortgage market. It would entail risks to the financial stability of firms, who would be unable to vary their rates in line with their funding costs, and would be unfair to borrowers in the wider mortgage market who pay similar rates to mortgage prisoners. It is also important to note that the SVRs charged by inactive firms are in line with those paid by borrowers in the active market.
Ultimately, the pricing of mortgages is a commercial decision for lenders. However, if mortgage borrowers do fall into financial difficulty, FCA guidance requires firms to provide support through tailored forbearance options. The Government has also taken a number of measures aimed at helping people to avoid repossession, including Support for Mortgage Interest loans for those in receipt of an income-related benefit, and protection in the courts through the Pre-Action Protocol, which makes clear that repossession must always be the last resort for lenders.
Asked by: Justin Madders (Labour - Ellesmere Port and Bromborough)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the potential merits of introducing of a moratorium on interest rate rises for mortgage prisoners.
Answered by Andrew Griffith - Shadow Secretary of State for Business and Trade
The Financial Conduct Authority’s review into mortgage prisoners, published in November 2021, found that the population of mortgage prisoners is varied and complex. There is no single measure to address the circumstances of this population of mortgage holders.
The pricing of mortgages is a commercial decision for lenders in which the Government does not intervene. It is worth noting, however, that interest rates are rising across the world as countries manage rising prices largely driven by the COVID-19 pandemic and Putin’s illegal invasion of Ukraine.
The Government understands that people across the UK are worried about the cost of living, and are seeing their disposable incomes decrease as they spend more on the essentials. That is why we have announced £37 billion of support for the cost of living this financial year. In addition to the Energy Price Guarantee, millions of the most vulnerable households will receive £1,200 of support this year, with additional support for pensioners and those claiming disability benefits.
If mortgage borrowers do fall into financial difficulty, Financial Conduct Authority (FCA) guidance requires firms to provide support through tailored forbearance options. The Government has also taken a number of measures aimed at helping people to avoid repossession, including Support for Mortgage Interest loans for those in receipt of an income-related benefit, and protection in the courts through the Pre-Action Protocol, which makes it clear that repossession must always be the last resort for lenders.
Asked by: Angela Eagle (Labour - Wallasey)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether his Department has made an assessment of the potential merits of capping profit margins on standard variable rate mortgages.
Answered by Andrew Griffith - Shadow Secretary of State for Business and Trade
The Financial Conduct Authority’s (FCA) review into mortgage prisoners, published in November 2021, found that there are 47,000 mortgage prisoners who might benefit from switching to a new mortgage deal but are considered too high risk to do so, despite being up to date with payments.
The review makes clear that the reason mortgage prisoners are unable to switch are varied and complex. As such, there is no silver bullet to address the circumstances of this entire population of mortgage holders without being unfair to other borrowers.
The Government has already worked with the FCA to implement changes to its mortgage lending rules, removing the regulatory barrier that prevented some mortgage prisoners, who otherwise may have been able to switch, from accessing new products. These rules should allow customers to switch to an active lender as long as they meet the lender’s risk appetite and certain criteria, such as not looking to borrow more.
Ultimately, the pricing and availability of mortgages is a commercial decision for lenders in which the Government does not intervene. As such, the Government cannot force lenders to lend to borrowers that sit outside of their risk appetite.
Any further work on this issue must consider the impact and practicality of solutions and their effects on the wider mortgage market, including the resilience of firms and fairness to other borrowers. There is no evidence, for instance, that consumers have experienced detriment that would be resolved by an extension of the regulatory perimeter. It is also worth noting that the Standard Variable Rates (SVRs) charged by inactive firms are in line with those paid by borrowers in the active market. The Government remains open to practical and proportionate solutions to help mortgage prisoners that do not pose unacceptable financial stability risks, and are not unfair to other borrowers in the mortgage market.
More broadly, the Government understands that people across the UK are worried about the cost of living. That is why we have announced £37 billion of support for the cost of living this financial year. We have also taken decisive action to support millions of households with rising energy costs this winter through the Energy Price Guarantee and the Energy Bill Relief Scheme. Millions of the most vulnerable households will receive £1,200 of support this year, with additional support for pensioners and those claiming disability benefits.
When mortgage borrowers are in financial difficulty and struggling to pay their mortgage, FCA guidance requires firms to provide support through tailored forbearance options. The Government also offers support to borrowers through Support for Mortgage Interest (SMI) loans to homeowners in receipt of an income-related benefit, and protection in the courts under the Mortgage Pre-Action Protocol.
Asked by: Angela Eagle (Labour - Wallasey)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment his Department has made of the potential merits of introducing a moratorium on interest rate rises for those with pre-2008 mortgages in non-lending closed books.
Answered by Andrew Griffith - Shadow Secretary of State for Business and Trade
The Financial Conduct Authority’s (FCA) review into mortgage prisoners, published in November 2021, found that there are 47,000 mortgage prisoners who might benefit from switching to a new mortgage deal but are considered too high risk to do so, despite being up to date with payments.
The review makes clear that the reason mortgage prisoners are unable to switch are varied and complex. As such, there is no silver bullet to address the circumstances of this entire population of mortgage holders without being unfair to other borrowers.
The Government has already worked with the FCA to implement changes to its mortgage lending rules, removing the regulatory barrier that prevented some mortgage prisoners, who otherwise may have been able to switch, from accessing new products. These rules should allow customers to switch to an active lender as long as they meet the lender’s risk appetite and certain criteria, such as not looking to borrow more.
Ultimately, the pricing and availability of mortgages is a commercial decision for lenders in which the Government does not intervene. As such, the Government cannot force lenders to lend to borrowers that sit outside of their risk appetite.
Any further work on this issue must consider the impact and practicality of solutions and their effects on the wider mortgage market, including the resilience of firms and fairness to other borrowers. There is no evidence, for instance, that consumers have experienced detriment that would be resolved by an extension of the regulatory perimeter. It is also worth noting that the Standard Variable Rates (SVRs) charged by inactive firms are in line with those paid by borrowers in the active market. The Government remains open to practical and proportionate solutions to help mortgage prisoners that do not pose unacceptable financial stability risks, and are not unfair to other borrowers in the mortgage market.
More broadly, the Government understands that people across the UK are worried about the cost of living. That is why we have announced £37 billion of support for the cost of living this financial year. We have also taken decisive action to support millions of households with rising energy costs this winter through the Energy Price Guarantee and the Energy Bill Relief Scheme. Millions of the most vulnerable households will receive £1,200 of support this year, with additional support for pensioners and those claiming disability benefits.
When mortgage borrowers are in financial difficulty and struggling to pay their mortgage, FCA guidance requires firms to provide support through tailored forbearance options. The Government also offers support to borrowers through Support for Mortgage Interest (SMI) loans to homeowners in receipt of an income-related benefit, and protection in the courts under the Mortgage Pre-Action Protocol.
Asked by: Angela Eagle (Labour - Wallasey)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether his Department has made an assessment of the potential merits of moving mortgage prisoners’ mortgages to active lenders.
Answered by Andrew Griffith - Shadow Secretary of State for Business and Trade
The Financial Conduct Authority’s (FCA) review into mortgage prisoners, published in November 2021, found that there are 47,000 mortgage prisoners who might benefit from switching to a new mortgage deal but are considered too high risk to do so, despite being up to date with payments.
The review makes clear that the reason mortgage prisoners are unable to switch are varied and complex. As such, there is no silver bullet to address the circumstances of this entire population of mortgage holders without being unfair to other borrowers.
The Government has already worked with the FCA to implement changes to its mortgage lending rules, removing the regulatory barrier that prevented some mortgage prisoners, who otherwise may have been able to switch, from accessing new products. These rules should allow customers to switch to an active lender as long as they meet the lender’s risk appetite and certain criteria, such as not looking to borrow more.
Ultimately, the pricing and availability of mortgages is a commercial decision for lenders in which the Government does not intervene. As such, the Government cannot force lenders to lend to borrowers that sit outside of their risk appetite.
Any further work on this issue must consider the impact and practicality of solutions and their effects on the wider mortgage market, including the resilience of firms and fairness to other borrowers. There is no evidence, for instance, that consumers have experienced detriment that would be resolved by an extension of the regulatory perimeter. It is also worth noting that the Standard Variable Rates (SVRs) charged by inactive firms are in line with those paid by borrowers in the active market. The Government remains open to practical and proportionate solutions to help mortgage prisoners that do not pose unacceptable financial stability risks, and are not unfair to other borrowers in the mortgage market.
More broadly, the Government understands that people across the UK are worried about the cost of living. That is why we have announced £37 billion of support for the cost of living this financial year. We have also taken decisive action to support millions of households with rising energy costs this winter through the Energy Price Guarantee and the Energy Bill Relief Scheme. Millions of the most vulnerable households will receive £1,200 of support this year, with additional support for pensioners and those claiming disability benefits.
When mortgage borrowers are in financial difficulty and struggling to pay their mortgage, FCA guidance requires firms to provide support through tailored forbearance options. The Government also offers support to borrowers through Support for Mortgage Interest (SMI) loans to homeowners in receipt of an income-related benefit, and protection in the courts under the Mortgage Pre-Action Protocol.