Martin Lewis: Money saving expert funds study in to 'mortgage prisoners' to aid homeowners | Personal Finance

Martin Lewis detailed this morning on Good Morning Britain that around 250,000 people are what’s known as “mortgage prisoners”. Martin explained: ”There are a quarter of a million people in this country with mortgages that they are never gonna be able to escape from, never gonna be able to get cheaper deals, who are paying way more than everybody else.” Martin revealed the reason for so many of these mortgages existing in the first place is due to the financial crisis of 2008, and said: “Often, not always, it’s because their loans were sold by the government, ex-Northern Rock ex-Bradford & Bingley customers, onto inactive lenders who don’t have any other products.”

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As the crisis, known as the “credit crunch”, hit disastrous points in 2008 the British government (and governments across the world) stepped in to bail out failing banks.

Some of these banks provided thousands of people with mortgages, including previous household names like Northern Rock.

Eventually, the government sold some of these banks on to other lenders who weren’t able to lend or offer any other products, resulting in many being trapped with mortgages that had no options for improvement or altering.

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Mortgage prisoners

Martin Lewis detailed that thousands can be considered “mortgage prisoners” (Image: GETTY & ITV)

Mortgage costs

Mortgage costs can be a huge problem for homeowners (Image: GETTY)

As Martin continued: “And this has caused for the last decade a lifetime of misery, mental health problems, stress, discomfort, being unable to afford their lifestyles and going onto benefits for many many people.”

However, he has been taking steps for years to help those trapped in these problems.

What has already been done?

Starting in 2015, Mr Lewis met with key figures from the EU, the Treasury and the mortgage and financial regulator the Financial Conduct Authority (FCA).

Attempts were made to organise a summit amongst these organisations to collectively find solutions or the issue. Unfortunately, the summit didn’t take place.

The following year, then-chancellor George Osborne wrote to mortgage lenders after discussing the problem with Mr Lewis.

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However, Martin Lewis said that the letter written by George Osborne only addressed “a fraction of the problem”.

In May 2018, the FCA found that 150,000 consumers in the UK were mortgage prisoners. The regulator was able to help around 30,000 of the mortgage prisoners it identified, forcing lenders to help the consumers affected.

Unfortunately, for the remaining 120,000 the FCA found that their mortgages were bought by firms who were unauthorised to lend, as such the FCA had no power to make them do anything.

Property towns

Property and mortgage costs can vary across the country (Image: EXPRESS)


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Work continued in this area over the following months. Recent findings found that the problem was bigger than previously thought with 250,000 people having mortgages with inactive or unregulated lenders.

Of these, only 170,000 were up to date with payments. In October 2019, the FCA removed certain barriers which stopped mortgage prisoners from finding a cheaper deal but this has had limited success.

Where to go from here?

Martin Lewis wants the wider government to step in and help. The study that he has personally funded, with a £25,000 donation, is looking into the route issues and further policy change possibilities.


Thousands of households

Thousands of households across the UK are struggling with these mortgages (Image: GETTY)

As he discussed: “The regulator we pushed to do some stuff about it and it’s done some stuff, it’s changed the rules. We want lenders to give more, to unlock more mortgage prisoners but ultimately the government needs to look at this and see what it can do.

“So I’m funding a study with the London School of Economics, a big one, to try and look at routes, policy changes, because ultimately my belief is you can leave 250,000 people languishing and add costs to the NHS because of mental health and benefits and all that.

“Or you can actually get them out of the problem fix that in the first place and it’ll probably be a lot cheaper and that’s what I’ve asked them to find out.”