Money Saving Expert to fund ‘mortgage prisoners’ research

A new study at the London School of Economics and Political Science (LSE), funded by MoneySavingExpert.com founder Martin Lewis, will look to find solutions to unchain 170,000 ‘mortgage prisoners’.

The research is the latest step in Martin and MoneySavingExpert’s long-running campaign to help homeowners trapped on expensive mortgages.

Its aim is to find evidence-based policy solutions, which will push the Government to step in and rescue the mortgage prisoners that the financial regulator can’t reach.

The study will be personally funded by a donation of around £25,000 from Martin, through his charitable foundation.

Martin Lewis, Founder of MoneySavingExpert.com, said “It’s time the Government accepted the responsibility to find a solution for these vulnerable consumers. Its failure to do so is short-sighted. The cost of mortgage prisoners doesn’t just fall on the individuals, it falls across society.”

“The impact of leaving people locked in to unaffordable mortgages can be catastrophic. It can leave them dependent on the state, with little savings for old age, and even adding to NHS costs with the hideous and disastrous mental health impact that can occur when you destroy someone’s financial life choices.”

“So over the next few months, we’re asking the LSE to explore a range of cost-effective, practical policy solutions the Government could employ to rescue mortgage prisoners – which we can then take to the Treasury.”

“I won’t pre-empt their work, but it’ll include a feasibility study of solutions – for example, subsidising competitive lenders to enable them to offer mortgage prisoners a decent deal. Then I hope where possible that can be compared to the cost to the economy of doing nothing – and leaving mortgage prisoners locked in for life or losing their homes.”

“It’s worth remembering that the Government spent billions bailing out one set of victims of the financial crash – the banks. Yet it’s done nothing to help another set – those locked into high-rate mortgages.”

“In fact it’s actually responsible for some of their pain, selling the mortgage customers of former lenders like Northern Rock and Bradford & Bingley to inactive lenders, who have no other mortgage products, or firms who are not authorised to offer new products, leaving these mortgage prisoners with no option other than to try to afford to keep paying obscene rates.”

Responding to the plans UK Finance Director of Mortgages Jackie Bennett said UK Finance is working with a wide range of banks, building societies and specialist lenders to help them develop new products for borrowers with inactive firms who are eligible under the Financial Conduct Authority’s revised affordability criteria. We are also actively considering other practical ways in which these customers could be helped.”

“The Money Saving Expert research will build on these industry-wide efforts by providing further valuable insight into potential solutions for these customers.”

“We will continue to work closely with members, the FCA and the government to help find solutions for as many customers as possible.”