Some 150,000 homeowners that were unable to switch to a cheaper mortgage deal after their lenders were 'nationalised' i.e. taken into public ownership, are seeking legal action against the companies responsible.
Mortgage prisoner homeowners were trapped in standard variable rate mortgages as they were unable under newer 'affordability' tests to move to a new rate when there rate deal ended or to a new lender and had therefore been overcharged for years with higher interest. The group Legal Action brought by the UK Mortgage Prisoner Action Group is looking to claim repayment of the extra interest.
Those affected have been paying more than 5% interest on their mortgages for the past 12 years, they had taken their mortgages out back in the late 2000s with Northern Rock and Bradford and Bingley who offered much higher lending multiples.
In some case’s people paid more than double the cost of the best rate available on the market.
In March, the FCA changed its affordability checks making it easier for customers to get a more affordable mortgage, banks and building societies would still need to agree to take the customers on.
Yet again, the FCA fails to acts after the problem was identified years ago having only recently moved and now yet more legal action and compensation claims will bog down financial and legal systems.