“If we are heroes, why are we exploited”

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Legend
Key employees Kevin and Melissa Antwhistle stuck in “financial nightmare” because of their mortgage


MPs call on government to step in and help more than 170,000 “mortgage prisoners” who are trapped by high interest rates.

Thousands of front-line workers, including nurses and hospital workers, are forced to pay double the interest they would have on a competitive mortgage.

Strict financial accessibility rules prevent them from renewing the mortgage for a lower price.

MEPs now want the government to order regulators to investigate the cap on corporate profits from borrowers.

They are asking the Competition and Markets Authority (CMA) and the Financial Conduct Authority (FCA) to undertake a joint consultation and introduce a cap on standard variable rates.

The Treasury said it sympathized with the situation of borrowers who cannot change mortgages if, for example, their loan is too high relative to the value of their house or because they are now too old to remortgage .

Last October, the FCA reformed the accessibility rules to allow lenders to help mortgage detainees obtain cheaper home loans.

But so far, no lender has done so.

Some key workers, who are also mortgage prisoners, say that the financial pressure caused by paying much more than other owners adds to the considerable stress of being on the front line during the coronavirus pandemic.

“Financial nightmare”

Melissa Antwhistle dresses daily in protective gear for 24 hour shifts on the front line at Scunthorpe General Hospital, including in the intensive care unit.

But financially, she feels far from being supported.

Speaking between shifts, she said, “Many mortgagees are key workers like me and my husband. Doing this job with all the stress from Covid and also taking care of our children aged one and three, we could do without the additional stress and anxiety of this financial nightmare.

Image copyright
Melissa Antwhistle

Legend

Melissa Antwhistle is a front line NHS worker


“While the nation cheered for key workers every Thursday evening with admiration, in fact we risked everything not only to fulfill our vocations, but also because we were forced to work 24 hours a day just to keep a roof over our heads. on our heads. ”

Her husband Kevin – also a key worker who runs and maintains a power plant on the south bank of Humber – took out a £ 120,000 mortgage with Northern Rock in 2007 at 100% of the value of her home with an additional unsecured loan .

Northern Rock’s “Together” mortgage was approved at the time by regulators under the supervision of the Treasury.

But it was a decision he had 13 years to regret.

After its nationalization, the Treasury put its loan along with hundreds of thousands of others in a new entity called Northern Rock Asset Management (MRAM).

The Treasury then allowed NRAM to realize higher profit margins on standard variable rate mortgages, thus paving the way for the sale of a mortgage portfolio to private investors who could make big profits thanks to the repayments. that Kevin and Melissa were doing.

His loan was then sold in 2014 as part of a £ 13 billion loan portfolio to private investors whose mortgages were not subject to FCA regulation.

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Getty Images

Legend

Northern Rock collapsed in September 2007 before being nationalized


It was the largest privatization in UK history, achieving the Treasury’s long-awaited goal of re-privatizing nationalized mortgage assets during the 2008 financial crisis.

However, the investors who bought the loans were generally “inactive” lenders, which meant that they were unwilling or unable to offer new competitive offers to existing borrowers.

This meant that when their original interest rate agreements expired, Kevin and Melissa could not remortgage for a cheaper deal with their current lender.

Instead, they switched to the high standard floating rate where they paid interest rates between 6% and 9%, compared to loans of less than 3% if they could have remortgage.

Melissa and Kevin paid £ 780 per month on their Northern Rock loan, compared to £ 420 or less if they could remortgage. But because they have borrowed more than the value of the property, the financial accessibility rules of the regulators now say that they cannot remortgage.

In other words, the rules say they can’t afford to pay less.

“Watching the widespread financial support during the current crisis has been a bitter pill to swallow. For many years we have been criticized for being unprepared and saying that buying a mortgage is the risk you take, “said Kevin.

“Yet when we are asked to risk our lives and take risks for the health of our families, by making huge sacrifices, we continue to be exploited financially with no choice. Our work is professional but also necessary to pay prohibitive interest rates. “

‘Immediate action’

Rachel Neale of the UK Mortgage Prisoner Campaign said calls to the Treasury to help key workers and others trapped on high interest loans had not helped a single mortgage prisoner.

“Families are paralyzed by these high interest rates and are unable to live properly because of this. We must act immediately before things get worse and drive people into new arrears or cause repossessions. ”

In a letter to the Competition and Markets Authority, the all-party parliamentary group on mortgage detainees says that even during this period of record high official rates, mortgage detainees generally pay 4.4%, two and a half times the lowest rate. more competitive by 1.8% or less.

Legend

Activist Rachel Neale says families are “paralyzed” by high interest rates


“Mortgage prisoners are exploited, both by fully regulated lenders and by unregulated vulture funds, by being held at high variable rates,” said the letter, signed by LibDem, Conservatives and Labor MPs.

“We believe that the only way for mortgage inmates to see the essential improvements they need in an acceptable period of time will be for the CMA and FCA to jointly consult and introduce a cap for standard variable rates.”

A spokesperson for the Treasury said, “We know that being unable to change mortgages can be stressful.

“This is why we have introduced rules that will make it easier for some customers to switch suppliers, which we now plan to implement by the end of the year.

“The Financial Conduct Authority also reiterated to lenders that clients with variable rate mortgages should be treated fairly and that lenders should actively review their rates. “

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