We failed mortgage prisoners trapped on ‘excessively high’ rates, says senior Tory

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1. Tens of thousands of mortgage prisoners forced to pay “excessively high” interest rates for years in the wake of the financial crash were failed by the Tory government, a former minister has told *The i Paper*.

   Around 160,000 homeowners are stuck repaying thousands of pounds extra each year after being left stranded with ‘closed-book’ lenders who took on their mortgages when firms such as Northern Rock and Lehman Brothers collapsed in 2007 and 2008.

   Mortgage prisoners cannot switch [mortgages](https://inews.co.uk/topic/mortgages?ico=in-line_link) because their provider is no longer an active lender, meaning they became trapped on higher standard variable interest rates (SVRs) after their fixed-term deals expired.

   Stricken borrowers have campaigned for years for compensation and government intervention, but were dealt a major blow in 2021 when MPs voted against a cap on interest rates for mortgage prisoners.

   A group of 2,500 former Northern Rock customers are now taking legal action against TSB subsidiary Whistletree, a closed-book lender, over the rates they were charged in a case which could result in a compensation bill of more than £4 billion.

   Conservative shadow housing secretary Kevin Hollinrake, who voted against the interest rate cap in 2021, said he wishes he had defied party whips and that the government let mortgage prisoners down.

   He said: “I think it’s wrong that [mortgage prisoners] don’t pay a fair rate on their mortgage. It’s clearly extracting value from an investment with the people who are caught in the middle.

   “I think [voting against the Government] would have been the right thing to do.”

   In 2021 the House of Lords passed an amendment to the Financial Services Act to cap rates for mortgage prisoners.

   After Conservative government whips instructed the party’s MPs to vote against the amendment in the House of Commons, chancellor Rishi Sunak promised to look at “workable solutions” for mortgage prisoners.

   The Treasury argued the proposed SVR cap for one group of homeowners would be “unfair” on other borrowers.

   Hollinrake said he was assured by the Treasury that a solution would be found.

   “I was probably a little bit naive at the time, but we were given assurances – ‘don’t worry, we’ll find a solution’… but in the face of any other workable solution [capping the rates mortgage prisoners were charged] was the best solution on the table.”

   A legal case brought by about 2,500 former Northern Rock mortgage customers, whose home loans were sold to Whistletree after the bank went bust, is expected to proceed to a full trial at the High Court later this year.

2. This is one on a long list the Tories failed during their time in power. 14 years wasted.

3. I wonder if “Dave Fishwick” (The bank of Dave) would consider campaigning for this cause .
   He has a lot of clout lately with his two films and his reversal of the bandid payday loan lenders .
   Politicians hate bad publicity , this could get the ball rolling .

4. Would like to see how many of the “trapped” mortgage holders took out the 125% mortgages or were in arrears etc.

   Only asking as from the article the bank is saying 2/3 of accounts were able to switch.

   It’s not always as straightforward as Tory/banks bad (considering these mortgages were issued under the previous Labour government seems to have been glossed over as well but that’s a side point) as potential bad debts will always incur higher rates and as mentioned, there is an element of unfairness to merge this risk with the good payers.

5. ‘We failed everyone but ourselves and our donors’

   Corrected that for you, Tory cunt

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