Around 47,000 borrowers in the UK are “mortgage prisoners”, according to a new review conducted by the FCA.

Data published by the regulator set out the loan and borrower characteristics of the wider population of 195,000 mortgages in closed books with inactive firms. This includes the FCA’s estimate of the number of the borrowers who can and cannot switch, as well as the number of mortgage prisoners. 

According to the FCA’s figures, 66,000 borrowers may be able to switch, which would involve situations where borrowers have not yet tried to. However, it showed there are 47,000 mortgage prisoners who, despite being up to date with payments, cannot switch when it might benefit them to do so, because they have loan or borrower characteristics that are outside current lender appetite.

The FCA also stated there are 34,000 borrowers who are in payment shortfall, and 18,000 who are near-term. These borrowers would not be able to switch to a new deal, even if they were with an active lender.

According to the analysis, there are also another 30,000 who can’t switch but are unlikely to benefit from switching, which would include individuals up to date with their payments but can’t switch because of their loan and borrower characteristics. However, the interest rate they are on would mean they’d be unlikely to save money from switching – so the FCA does not define these individuals as mortgage prisoners.

“We understand the difficult circumstances that mortgage prisoners are in,” the FCA said. “That’s why the government asked us to provide data to help them consider whether there are practical and proportionate solutions to help these borrowers.

“The government and industry will use this review to consider if there are further practical and proportionate solutions for mortgage prisoners. We will continue to support them to do this and we will focus on those areas in the market where we identify the greatest harm which could affect mortgage prisoners and other borrowers.”

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