Asked by: Chris Evans (Labour (Co-op) - Islwyn)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will announce a timeline for a decision on whether additional measures will be introduced to further support mortgage prisoners.
Answered by Bim Afolami - Economic Secretary (HM Treasury)
The Government understands that being unable to switch your mortgage can be extremely stressful. Alongside the Financial Conduct Authority and industry, we have shown we are willing to act through the introduction of a ‘modified affordability assessment’, which removes the regulatory barriers that prevented some customers, who otherwise may have been able to switch, from accessing new products. We are also regularly in contact with key stakeholders, including recently with the UK Mortgage Prisoners campaign group.
The Government remains committed to this issue and will continue to work with industry and wider stakeholders to determine if there are proposals that will meaningly benefit 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, what recent steps he has taken to support homeowners who are unable to switch to a cheaper mortgage deal.
Answered by Bim Afolami - Economic Secretary (HM Treasury)
The Government understands that being unable to switch your mortgage can be extremely stressful. Alongside the Financial Conduct Authority and industry, we have shown we are willing to act through the introduction of a ‘modified affordability assessment’, which removes the regulatory barriers that prevented some customers, who otherwise may have been able to switch, from accessing new products. We are also regularly in contact with key stakeholders, including recently with the UK Mortgage Prisoners campaign group.
The Government remains committed to this issue and will continue to work with industry and wider stakeholders to determine if there are proposals that will meaningly benefit 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 Answer of 8 March 2023 to Question 157639 on Mortgages, whether he plans to publish a response to the report entitled Releasing the Mortgage Prisoners, published on 1 March 2023.
Answered by Bim Afolami - Economic Secretary (HM Treasury)
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, such as through the introduction of a ‘modified affordability assessment’.
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, we welcome views on any further practical and proportionate solutions that would meaningfully assist affected borrowers and be fair to other borrowers in the wider market. We are also regularly in contact with key stakeholders, including recently with the UK Mortgage Prisoners campaign group, to discuss potential solutions.
Asked by: Harriett Baldwin (Conservative - West Worcestershire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, with reference to his Department's policy paper, Mortgage Charter, updated on 5 July, what recent assessment he has made of the implications for his policies of proposed solutions in the report entitled Releasing the mortgage prisoners, published by the London School of Economics in February 2023.
Answered by Andrew Griffith - Minister of State (Department for Science, Innovation and Technology)
The Government understands that being unable to switch your mortgage can be extremely stressful, and, alongside the Financial Conduct Authority (FCA) 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.
Importantly, all lenders – including those with inactive books - are regulated by the FCA and must provide tailored support to borrowers. The Chancellor has made clear his expectation for lenders to live up to their responsibilities and support any mortgage borrowers who are finding it tough right now. The Government hopes other firms will do the right thing and sign up to the Mortgage Charter as soon as possible.
However, the Government remains committed to the issue of mortgage prisoners, and we are considering the proposals put forward in the London School of Economics 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: 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 - Minister of State (Department for Science, Innovation and Technology)
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 - Minister of State (Department for Science, Innovation and Technology)
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 (Labour - Denton and Reddish)
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 - Minister of State (Department for Science, Innovation and Technology)
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 - Minister of State (Department for Science, Innovation and Technology)
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)
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 - Minister of State (Department for Science, Innovation and Technology)
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 - Minister of State (Department for Science, Innovation and Technology)
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.