County Durham 'mortgage prisoner' scared she could lose home

A County Durham woman who is facing losing her home of 17 years due to spiralling mortgage costs is backing calls for Government action.

Alexis Sterry, from Stanley, found her mortgage repayments doubled last year and her monthly repayments are now more than £1,000.

She is one of thousands of so-called "mortgage prisoners" who were left tied to high-interest mortgages after their lenders collapsed during the 2008 financial crisis.

Victims have found themselves unable to switch to more affordable rates because of tough borrowing criteria.

Ms Sterry said: "We're now at the point where they're threatening repossession and eviction and we are in this situation through no fault of our own.

"We're caught between a rock and hard place. We can't remortgage because there's no equity and no-one is giving out 100% mortgages any more."

She and her ex-partner first got a 100% mortgage in 2007, before the financial crash.

Following the collapse of Northern Rock in 2008, her lender also collapsed and her mortgage was sold to another company. It has since been sold to another company.

While the cost of repayments started to climb, they were able to keep up with the increasing costs. However, in 2011 they had to move to making interest only payments when Alexis went on maternity leave after having her first child.

The mother-of-two, who can no longer work as a teaching assistant due to health problems, said her family home is in negative equity due to a fall in house prices.

Last year, rates went up to 8.9% - meaning she is paying more than £1,000 a month.

She is now getting daily letters from her lender and is worried her home may be repossessed. She is also concerned if they do lose their home, they will struggle to rent because of their poor credit rating.

She said: "We're locked into a house we can't do anything with. We can't move out, we can't sell it. Because of the house price crashing so badly from when we first bought it it's not even worth what the mortgage was.

"So even if we decided to sell we would still be left with a huge deficit of debt."

What is a mortgage prisoner?

Definitions vary, but generally speaking a "mortgage prisoner" is someone who is unable to switch mortgages to a better deal, even if they are up to date with their payments.

Most people affected have a mortgage in a closed book of an inactive firm - which means that the mortgage is held with a lender that can no longer make mortgage contracts because they are not allowed to.

Many of these closed books were created when firms collapsed in or soon after the 2008 financial crisis.

The Financial Conduct Authority (FCA) said there were about 195,000 mortgage holders in closed books in 2021 - down from 250,000 in 2019.

However, of the 195,000 only 47,000 of those people were "mortgage prisoners" according to the FCA's definition.

The FCA argues that others in the larger figure are not mortgage prisoners because they either could move their mortgages but have not done so, they are unlikely to benefit from doing so or are not up to date with payments so they would not be eligible to move.

However, some people have criticised those assumptions, arguing that many people have only fallen into arrears because they are paying much more than they might elsewhere.

Campaigners, who are urging the Government to look again at how to support those stuck on high repayments rates, have warned that without action the issue could become the next Post Office scandal.

Olivia Selley, a solicitor for Harcus Parker, said: "People think it's a small problem but it's not a small problem for our clients. Lives have been completely devastated. For these clients they have spent tens of thousands more on their mortgages over the last 15 years and they are trapped with them.

"They are paying between eight and nine per cent as standard and they can't keep finding the money to meet their repayments."

Rachel Neale, a campaigner for UK Mortgage Prisoners, said: "Ultimately people are committing suicide. They are being victimised. They are being blamed for a situation that wasn't theirs and it's completely wrong on every level.

"These people took out a mortgage like thousands do every single day and they have no control. We have no control as consumers over what these banks do to us and what these companies do to us. The Government has a hand in that."

Ms Sterry said: "I feel like they are not aware or not willing to do anything about it. Something needs to be done in terms of the lending criteria. We have to be given a chance to get out of this situation and keep our homes over our heads. Doors are closed every where you turn.

"We don't have the same options as everyone else. They are just able to remortgage and we are stuck with these companies who keep increasing the interest rates and we have to pay it."

An HM Treasury spokesperson said: “The Government understands the difficulties faced by borrowers who were not able to switch to a new mortgage deal.

“We have updated mortgage lending rules, removing the barrier that prevented some mortgage prisoners from being able to switch, and introduced significant financial and legal protections for those most in difficulty.

“We continue to work with the Financial Conduct Authority and the sector on this issue and will carefully consider practical and proportionate solutions put forward."

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