Tories are forcing ‘mortgage prisoners’ to pay up to three times a competitive interest rate

Houses: are their mortgages competitive or will buyers become ‘mortgage prisoners’ because of decisions made, not by them, but by the Tory government?

Is this part of that “bonfire of red tape” that David Cameron and his cronies were trumpeting a few years ago?

I wonder how many of the quarter-of-a-million so-called “mortgage prisoners” merrily voted Tory in the belief that this meant they would find it easier to switch lenders.

And I wonder how they feel, now they know that the opposite is the case.

The salt in their wound, of course, is the fact that it is the Tory government itself that sold their mortgages to unregulated lenders – and is now blocking a change in the law that would help them.

Tougher affordability checks have made it hard to change lenders if a home owner’s mortgage is large compared to the price of their house, if they are close to retirement or have bad credit.

While many lenders are able to switch to different deals with the same lenders, that have lower interest rates, around 250,000 are blocked from doing this because the lenders to whom the Treasury sold their mortgages don’t offer such deals.

The upshot is that they are stuck forking out two or three times what they would pay in a competitive mortgage.

The House of Lords has passed an amendment to the Financial Services Act to cap rates for borrowers in that position, but government whips are instructing Conservative MPs to vote against the amendment on Monday.

Chancellor Rishi Sunak reckons capping the interest rate would be “unfair” on other borrowers.

I don’t see why. How is it unfair to let these people have the same deal as everybody else?

Or does Sunak mean it would be unfair on the lenders to deprive them of one- or two-thirds of their profits?

Should we perhaps be asking questions about how the Treasury chose these particular firms to receive these particular mortgages?

Is this another aspect of the lobbying scandal that we have yet to grasp?

Source: Treasury snubbing ‘mortgage prisoners’, say MPs – BBC News

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