Mortgage prisoners ‘distressed and betrayed’ as MPs reject interest cap
May 1, 2021, 10:20 am

Mortgage prisoners ‘distressed and betrayed’ as MPs reject interest cap

Many ‘mortgage prisoners’ took out their home loans with lenders that had to be rescued during the financial crisis, including Northern Rock.

Borrowers still trapped into paying 5%-plus rate with inactive lenders that do not offer cheaper deals Mortgage prisoners

Mortgage borrowers trapped on interest rates of more than 5% say they are “disappointed, distressed and betrayed” after MPs voted against a cap on how much lenders can charge.

The plan to limit standard variable rates (SVRs) charged by inactive lenders was an amendment to the financial services bill added in the House of Lords to help a group of about 250,000 borrowers known as mortgage prisoners.

Many originally took out their home loans with lenders that had to be rescued during the financial crisis, including Northern Rock and Bradford & Bingley, and have since had their mortgage sold on to another provider.

These providers typically do not offer any new cheaper deals that people can switch to.

As a result, the borrowers are paying SVRs that are often in excess of 5%, while the Bank of England base rate stands at 0.1% and the average cost of a two-year fixed-rate mortgage is 2.6%, according to the data firm Moneyfacts.

Issues, such as negative equity, having an interest-only mortgage, missed payments or changes in circumstances, have prevented them from switching to a new lender.

The amendment proposed a cap on SVRs set at two percentage points above the base rate, which would have meant a current pay rate of 2.1%.

However, on Tuesday, MPs voted 355 to 271 to reject it.

The UK Mortgage Prisoner Action Group said it was “utterly disappointed, distressed and betrayed” by the result.

It said the vote marked “a continued failure of government to find immediate solutions and to put right the failure of successive governments which saw us pay for the iniquity of regulated banks in 2008, hiking our interest rates, and then selling off our homes to foreign and domestic vulture funds”.

Martin Lewis, the founder of MoneySavingExpert, who has backed the group and funded research into their situation, tweeted that he was saddened the amendment had fallen as it would keep up to 250,000 people “mired in financial hell”.

He had previously said that an SVR cap wasn’t “a balanced long-term solution. But in lieu of anything else, I believe that, for those on closed-book mortgages, it is a good stopgap while other detailed solutions are worked up.”

Addressing parliament, John Glen, the economic secretary to the Treasury, said analysis by the Financial Conduct Authority (FCA) showed that half of the 250,000 borrowers with inactive firms met the normal risk appetite of lenders, and could switch without government intervention.

“Of the remaining 125,000 who cannot switch, 70,000 are in arrears and therefore could not secure a new deal even if they were in the active market. Those borrowers need to work with their lender to agree an appropriate repayment plan,” he said.

“The remaining 55,000 who are with inactive lenders, and are up to date with their payments but who cannot switch, are paying on average only 0.4 percentage points more than similar borrowers on reversion rates with active lenders.”

He said the Treasury would work with the FCA to find out more about those who were up to date with payments but unable to switch.

HM Treasury said: “We know that being unable to switch your mortgage can be incredibly difficult. Many borrowers could now find it easier to switch lender thanks to recent rule changes by the FCA. We will work with the FCA to review the effectiveness of these changes and establish whether any further practical and proportionate solutions can be found for these borrowers.” Mortgage prisoners

source: Hilary Osborne

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BENEFIT, the Kingdom’s innovator and leading company in Fintech and electronic financial transactions service, held its Annual General Meeting (AGM) at the company’s headquarters in the Seef District.
During the meeting, shareholders approved all items listed on the agenda, including the ratification of the minutes of the previous AGM held on 26 March 2024. The session reviewed and approved the Board’s Annual Report on the company’s activities and financial performance for the fiscal year ended 31 December 2024, and the shareholders expressed their satisfaction with the company’s operational and financial results during the reporting period.
The meeting also reviewed the Independent External Auditor’s Report on the company’s consolidated financial statements for the year ended 31 December 2024. Subsequently, the shareholders approved the audited financial statements for the fiscal year. Based on the Board’s recommendation, the shareholders approved the distribution of a cash dividend equivalent to 10% of the paid-up share capital.
Furthermore, the shareholders endorsed the allocation of a total amount of BD 172,500 as remuneration to the members of the Board for the year ended 31 December 2024, subject to prior clearance by related authorities.
The extension of the current composition of the Board was approved, which includes ten members and one CBB observer, for a further six-month term, expiring in September 2025, pending no objection from the CBB.
The meeting reviewed and approved the Corporate Governance Report for 2024, which affirmed the company’s full compliance with the corporate governance directives issued by the CBB and other applicable regulatory frameworks. The AGM absolved the Board Members of liability for any of their actions during the year ending on 31st December 2024, in accordance with the Commercial Companies Law.
In alignment with regulatory requirements, the session approved the reappointment of Ernst & Young (EY) as the company’s External Auditors for the fiscal year 2025, covering both the parent company and its subsidiaries—Sinnad and Bahrain FinTech Bay. The Board was authorised to determine the external auditors’ professional fees, subject to approval from the CBB, and the meeting concluded with a discussion of any additional issues as per Article (207) of the Commercial Companies Law.
Speaking on the company’s performance, Mr. Mohamed Al Bastaki, Chairman BENEFIT , stated: “In terms of the financial results for 2024, I am pleased to say that the year gone by has also been proved to be a success in delivering tangible results. Growth rate for 2024 was 19 per cent. Revenue for the year was BD 17 M (US$ 45.3 Million) and net profit was 2 Million ($ 5.3 Million).

Mr. Al Bastaki also announced that the Board had formally adopted a new three-year strategic roadmap to commence in 2025. The strategy encompasses a phased international expansion, optimisation of internal operations, enhanced revenue diversification, long-term sustainability initiatives, and the advancement of innovation and digital transformation initiatives across all service lines.
“I extend my sincere appreciation to the CBB for its continued support of BENEFIT and its pivotal role in fostering a stable and progressive regulatory environment for the Kingdom’s banking and financial sector—an environment that has significantly reinforced Bahrain’s standing as a leading financial hub in the region,” said Mr. Al Bastaki. “I would also like to thank our partner banks and valued customers for their trust, and our shareholders for their ongoing encouragement. The achievements of 2024 set a strong precedent, and I am confident they will serve as a foundation for yet another successful and impactful year ahead.”
Chief Executive of BENEFIT; Mr. Abdulwahed AlJanahi commented, “The year 2024 represented another pivotal chapter in BENEFIT ’s evolution. We achieved substantial progress in advancing our digital strategy across multiple sectors, while reinforcing our long-term commitment to the development of Bahrain’s financial services and payments landscape. Throughout the year, we remained firmly aligned with our objective of delivering measurable value to our shareholders, strategic partners, and customers. At the same time, we continued to play an active role in enabling Bahrain’s digital economy by introducing innovative solutions and service enhancements that directly address market needs and future opportunities.”
Mr. AlJanahi affirmed that BENEFIT has successfully developed a robust and well-integrated payment network that connects individuals and businesses across Bahrain, accelerating the adoption of emerging technologies in the banking and financial services sector and reinforcing Bahrain’s position as a growing fintech hub, and added, “Our achievements of the past year reflect a long-term vision to establish a resilient electronic payment infrastructure that supports the Kingdom’s digital economy. Key developments in 2024 included the implementation of central authentication for open banking via BENEFIT Pay”
Mr. AlJanahi concluded by thanking the Board for its strategic direction, the company’s staff for their continued dedication, and the Central Bank of Bahrain, member banks, and shareholders for their valuable partnership and confidence in the company’s long-term vision.