Mortgage Prisoner Claims

Hundreds of thousands of homeowners have until recently been trapped paying excessively high interest rates on their mortgages.

Usually, when you take out a residential mortgage the interest is set at an introductory rate for a few years before changing to the lender’s standard variable rate. This rate is normally set at a higher level than the lender’s introductory rates and is used to encourage borrowers to re-mortgage and take advantage of the lower deals available.

Following the global financial crisis in 2007 and 2008, many lenders stopped offering new introductory rates to their existing customers or stopped actively competing in the mortgage market for new customers. They became ‘inactive’ lenders. The most well-known examples are Northern Rock and Bradford & Bingley following their nationalisation and subsequent restructuring. In other cases, active lenders sold mortgages to inactive lenders. Borrowers who discovered that their lender had become an inactive lender, whether by restructuring or transfer of the mortgage then lost the opportunity to re-mortgage with their existing lender. These borrowers were often also unable to re-mortgage with other providers as, despite previously qualifying for a mortgage, they did not pass the stricter affordability requirements introduced by the Financial Services Authority (now the FCA) following the global financial crisis

They became trapped being charged interest at a higher level than prevailing rates amongst active lenders in the residential mortgage market. This was even true in cases where borrowers were maintaining their mortgages at higher interest rates. Such borrowers that were unable to re-mortgage had no choice but to pay the high rates set by their inactive lender or face losing their home. They are known as ‘Mortgage Prisoners’. There were and are hundreds of thousands of Mortgage Prisoners in the UK.

Consumer Rights Solicitors are acting for Mortgage Prisoners to reclaim the difference between the high interest they have paid on their mortgages and the interest they would have paid if the rate had been set by their lender at a lower ‘fair’ level. The amount of compensation due to homeowners who join the litigation could be very significant. We are acting on a No Win, No Fee basis.