“Mortgage prisoners” who have overpaid thousands of pounds after being trapped in rip-off home loans for years are to protest outside the City watchdog on Friday.
The protestors are fighting for around 200,000 homeowners paying mortgage interest far in excess of the base rate, with no option to move because of changes to banking rules.
A number of homeowners face having their houses repossessed in the run-up Christmas after so-called vulture funds bought up their mortgages and hiked their monthly repayments without any consultation. Many have experienced depression and stress-related illnesses as a result of their ordeals.
Rachel Neale, who runs campaign group UK Mortgage Prisoners, said the situation was becoming “desperate” for some people and she was aware of at least one mortgage prisoner who had taken their own life.
The group is demanding action from the Financial Conduct Authority (FCA), which they say has so far done nothing to help them. Most of those affected bought their homes before the financial crash in 2007-8 and have since been told they are not allowed to remortgage because they do not meet stricter affordability checks that were subsequently introduced.
This leaves homeowners effectively being told by banks that they must stay on an expensive one because they cannot technically afford a cheaper one, according to the rules.
As interest rates have plummeted and remained near historic lows, thousands of consumers have been left paying thousands of pounds in additional interest and are unable to move home.
Problems have been exacerbated recently for some mortgage prisoners whose repayments have been hiked after their loans were bought up by “vulture funds”.
The funds, including Cerberus Capital Management and Heliodor, invest in debt considered to be high risk. But many mortgage prisoners believe they are not high-risk as they have exemplary repayment records.
The FCA says it has now powers to act because the vulture funds, unlike banks, building societies and many other financial services firms, are unregulated. The watchdog announced new rules in October allowing some mortgage prisoners to switch to loans at market rates, but they only apply to a minority of cases where the loans are owned by regulated firms.
Members of UK Mortgage Prisoners will protest outside the FCA’s offices in Stratford between 11am and 4pm on Friday 6 December as part of a wider group of victims of banking scandals.
Alongside them will be savers who lost thousands of pounds by investing in London Capital & Finance, a company that collapsed in January after mis-selling £236m of mini-bonds.
Also protesting will be former customers of Lloyds Banking Group who say their businesses and lives were ruined after the lender suddenly hiked interest rates sharply.
The protest will further ramp up pressure on FCA boss Andrew Bailey, who has faced criticism for the regulator’s response to a number of scandals.