This must apply to two and five-year mortgage terms and be no more than two percentage points above the Bank of England base rate.
The amendment requires the Financial Conduct Authority (FCA) to make this a rule so affected borrowers can access new fixed rates equal to or lower than the rate specified by the regulator.
To be eligible, mortgage prisoners must adhere to certain requirements such as being up to date with payments and having a remaining mortgage term of two years or more.
Speaking yesterday, Lord Sharkey, co-chair of the All Party Parliamentary Group for mortgage prisoners, said: “Solving the mortgage prisoner problem certainly requires reducing this usurious SVR, but it also requires giving the mortgage prisoners access to normal fixed-rate mortgage deals.
“I regret to say that there has been no real progress in either of these areas.
“This amendment takes a simpler and non-prescriptive approach. It places the obligation to fix the problem squarely on those who caused it — the Treasury.”
The bill will go through a report stage on Monday where MPs can consider any changes if needed. It will then go through a third reading in the House of Lords soon afterwards.
UK Mortgage Prisoners released a statement, saying: “The successful vote has brought immense relief to our members with renewed hope that their plight might finally be resolved.
“Implementing an SVR cap for closed book, inactive entities will bring an immediate end to the emotional, mental, and financial hardship and economic immobility that mortgage prisoners have faced for over a decade.”
Reintroducing amendment
Lord Stephenson withdrew the amendment in March after a previous debate on the same bill, but warned the government he would reintroduce it if there was not swift progress.
At the time he said: “We need convincing that there is work going on that will result in a workable solution of benefit to those affected by this within a reasonable timescale, otherwise we will come back… in a way that makes it clear that the government cannot continue to let this settle itself,” Lord Stephenson continued.
“It has to be taken forward in policy terms otherwise too much damage will be caused.”
