Mortgages (Switching)

Despite never having fallen behind on their payments, our constituents find themselves subject to a host of fees and other spurious admin charges. Incredibly, the amount that some of my constituents owed rose by almost £10,000 in a couple of years, with no additional lending offered. They were pushed into negative equity as the amount they owed Heliodor became greater than the value of their property.

The cruellest part of this sorry tale of modern Britain is this: one of my constituents is approaching the end of the 25-year term of their mortgage, but as they were forced into the interest-only plan, just a few short years after they began to make repayments, they now risk losing the family home of a quarter of a century unless they can come up with the full amount owed to Heliodor.

The aspect I find most galling is the inversion of the principle of home ownership, whereby people have ended up paying what is essentially rent to a vulture fund, which almost certainly knows it will be able to acquire the property at the end of the term. Topaz Finance will have been licking its lips, I am sure, at a deal that basically guarantees that it will be paid twice: first, through the monthly payments that my constituents have been making; and secondly, when it sells their home from under them in 2029 at a healthy profit over what it picked the property up for in 2019.

The long tail of the era of neoliberal economics is still pernicious, because there is a confusion between concepts such as taxpayer value and what any of us would think they actually mean. To people like me, taxpayer value is not found in pauperising hundreds of thousands of households, nor is it to be found in scraping back every single penny that taxpayers saw spent on ensuring that the economy did not collapse overnight. To this old-fashioned social democrat, government is not a bank, with shareholders that need to see the principal of its loans paid back in full; it is an institution that is able to intervene in the economy at strategic moments. That is an idea that I think is slowly coming back into fashion, but I wonder how many of our national assets have found their way into the paws of that type of offshore capital in the intervening 40 years, leaving taxpayers with all of the costs, none of the benefits, and absolutely hee-haw value. That is why this Bill is essential: not only to hold this Government to account, but to shine a light on the fiscal approach of the loyal Opposition.

The Bill seeks to end evictions for mortgage prisoners. Let us do what we can to lift the burden that they have carried over the years. I know from reading briefings that the Government are concerned about what they call the moral hazard of acting. If these people have not already had their houses repossessed by 2024, they must necessarily have kept up with their repayments, so there is a strong case for saying that the moral hazard lies in the other direction—companies have been deliberately stringing our constituents along.

It is surely also natural to put a cap on the SVRs being offered to mortgage prisoners, especially given the general climate of mortgage instability. Our constituents have been coping with high interest rates for over a decade, and we gain nothing from pushing them further into debt. Of course, there will be a cost to the taxpayer in the abstract, but this move will be an investment that pays itself back through the cascade of money into our local economies, instead of into the pockets of offshore vulture funds. I am afraid that the day of balance-sheet economics needs to end.

Finally, the Government owe it to mortgage prisoners to find a way for them to help themselves out of this mess. They should look into providing a vehicle that allows our constituents who are mortgage prisoners to pivot back into the mainstream market. The first suggestion of the report published by the LSE is that there should be free, comprehensive financial advice for all victims—that is what they are. Almost 200,000 people who are victims should be contacted individually to help them navigate their way out of the quagmire that they find themselves in. As I said, it gives me no pleasure to conclude that it appears there is nothing we can do to make up for what UK Mortgage Prisoners calls the

“extortionate interest rates, severe financial restrictions and mobility and mental & physical issues caused by this Government-made scandal.”

However, that does not mean that we should not try.

That Martin Docherty-Hughes, Alison Thewliss, Liz Saville Roberts, Claire Hanna, Stewart Hosie, Ben Lake, Amy Callaghan, Sammy Wilson, John McDonnell, Duncan Baker and Caroline Lucas present the Bill.

Martin Docherty-Hughes accordingly presented the Bill.