Mortgage Prisoners Trapped in High Interest Contracts Fight Back
Thousands of UK borrowers ‘imprisoned’ in high-interest mortgages due to the nationalisation of their lenders are mounting a fight back against those responsible. As many as 150,000 homeowners have found themselves locked into high-interest loans, with no option of switching to a cheaper deal.
A group lawsuit is now being filed by the UK Mortgage Prisoner Action Group, with some of its members looking to claim tens of thousands of pounds in excess interest repayments. While the Treasury has insisted its commitment to “removing barriers” to provide access to cheaper deals, those affected by the scandal have labelled the issue “a disgrace”.
Unacceptable Interest Rates
The lawsuit filed by the UK Mortgage Prisoner Action Group comes in the wake of thousands of mortgages taken out in the late 2000s being privatised following the collapse of Bradford & Bingley and Northern Rock. Some of those affected have reported paying an APR in excess of 5% on their mortgages for at least 12 years, with no option to switch to a better deal. Work out the costs of a mortgage using our UK mortgage calculator
This amounts to more than twice the interest being charged on equivalent mortgages by several major lenders during this time. One member of the group who spoke to the BBC stated that his mortgage interest rate has been locked at around 7%, resulting in tens of thousands of pounds in additional interest payments.
Like many, his mortgage was taken over by Northern Rock Asset Management (owned by UK Asset Resolution) following the downfall of Northern Rock. As his debt no longer exists as a mortgage in the traditional sense, the option of switching to a better deal with a new lender is not currently available.
The fightback against those responsible is being fronted by Damon Parker, partner at Harcus Parker solicitors. Speaking with the BBC on Wednesday’s Victoria Derbyshire program, Mr Parker said that it is the obligation of those who now manage the collapsed banks’ debts to offer their customers a competitive deal.
“We say that our clients have been unfairly treated because they’re paying too much… at a time when every other mortgage customer is paying unprecedented low rates” he said.
“It’s not fair to charge people just because they are collateral damage caught up in a nationalisation. Some people have got into terrible financial situations. Some people have been repossessed.”
A joint effort by the Treasury and the Financial Conduct Authority is said to be underway to help those affected access more affordable deals. However, it will ultimately be up to the banks and building societies themselves to agree to take over their mortgage debts.