UK Mortgage Prisoners has called for urgent action from the Financial Conduct Authority (FCA) and government to introduce a Standard Variable Rate (SVR) cap for mortgage prisoners as the latest rate rise could push rates to over seven per cent.

The campaign group said that if the most recent rise from the Bank of England was passed on, many members would face an average mortgage rate of 7.14 per cent, with many higher than that.

According to Moneyfacts latest figures, the average SVR is 5.86 per cent, the average two-year fixed rate mortgage is 6.47 per cent, the average five-year fixed rate mortgage is 6.32 per cent and the average 10-year fixed rate mortgage is 5.65 per cent.

It added that around 200,000 people are currently mortgage prisoners.

“We cannot emphasise enough the detriment these rates have caused mortgage prisoners. The FCA and government are not grasping the urgency of the need for solutions and intervention,” the group said.

Cap SVR for mortgage prisoners

It called for intervention to cap the base rate margin for mortgage prisoners and urged MPs to support an amendment to the Financial Services and Markets Bill.

The amendment would cap SVR for mortgage prisoners at two per cent above the Bank of England base rate and “ensure that all inactive lenders are forced to offer mortgage prisoners fixed rates”.

“The tally of physical and mental illness and stress caused is increasing with each rate rise announcement and it is unforgivable if government do not do more for mortgage prisoners rather than restating complexity and the limited action in the past, particularly given the withdrawal of the modified affordability products they so often refer to,” it explained.

‘Govt open to practical solutions’

Andrew Griffith, financial secretary to the Treasury, last week said that the government was “open to practical and proportionate solutions” to help mortgage prisoners as long as they do not “pose unacceptable financial stability risks” and are not “unfair to other borrowers”.

UK Mortgage Prisoners continued that Support for Mortgage Interest, which is a loan to help certain borrowers cover mortgage interest, was “unfit for purpose” and vulnerable homeowners were “treated differently” in terms of support compared to the rental sector.

The group added that it had not benefited from the “decade of historic lows” and were held on margins of 4.15 per cent above the base rate.

It has also recently called on the FCA for urgent answers to explain why lender entities that house mortgage prisoners cannot offer alternative rates.