The financial crash may be over a decade ago, yet people are still suffering. Especially hard-working families who have become trapped in expensive mortgage deals. Last week I presented a bill to Parliament to set these so-called mortgage prisoners free - and to forge a new covenant that would deliver a fairer deal for small business borrowers too.
Some 200,000 people across the country have become trapped by changes in mortgage regulation following the financial crash. The new rules say they can't afford payments lower than they are currently making. How can they not afford to pay less?
Take Charlotte, who is 39 years old and lives with her husband. They took out a Northern Rock mortgage in 2007. In 2010 she had twins who suffer from serious disabilities – both are wheelchair bound. They've never missed a single mortgage payment. Yet they cannot re-mortgage due to the regulators' affordability test. Why does this matter so much? Because with a fairer mortgage, they could pay much less and afford more therapies for their sick children.
So how can people like Charlotte be freed? These borrowers have proven their ability to pay for over a decade. So it makes no sense to have a computer-driven affordability test that ignores what's happening in the real world. My bill would legislate for computer says no to be overruled when reality says yes.
New laws are needed to protect small businesses borrowers too. You'd think that when they are making loan payments, they are untouchable. Yet it's all too easy to seize on a technical loan condition breach. Plenty of perfectly viable, successful businesses are wrongly ended this way. My bill would prevent a business being bankrupted by the banks if it is up to date with payments. It would also create a new Financial Services Tribunal – so small businesses that can't afford sky-high legal fees can fight back in these matters.
Legislation is also required to stop mortgages being sold off to vulture funds by the Treasury. These funds are unable to offer cheaper rates – and they are too often ruthless with homeowners and small business borrowers alike. No sales should be permitted without proper protection for borrowers.
We all know that capitalism is vital to the success of our economy – and a cornerstone of our way of life. Yet it must be tempered by responsibility and fairness. We want those who work hard to be rewarded. Yet we cannot allow people being taken unfair advantage of. That is why we need to forge a new covenant – to deliver greater fairness for borrowers and set the mortgage prisoners free.
If you have been affected by these problems, please get in touch. I want to hear your story and will do my best to help.
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