The Government has rejected calls for an independent inquiry into the treatment of "mortgage prisoners", despite thousands remaining trapped on high interest rate deals.
According to the Mortgage Prisoners Action Group, approximately 195,000 people are affected by this issue.
These homeowners found themselves unable to switch to better deals following the 2008 financial crisis, when their lenders collapsed and stricter borrowing criteria were introduced.
Liberal Democrat Lord Sharkey tabled legislation that would force the Government to start a public inquiry into the "17 years of harm caused to mortgage prisoners."
However, Lord Livermore, Treasury minister, dismissed the need for further investigation, stating that a new inquiry would not provide "any significant new information or additional support to those affected".
The decision comes as mortgage prisoners continue to face interest rates up to 10 per cent
Rebecca Wendel, a self-employed hairdresser from Leeds, is one of the thousands affected who ended up paying an interest rate of 9.79 per cent following Northern Rock's collapse.
Mortgage prisoners have been saddled with hiked repayments
GETTYHer monthly payments more than doubled from £1,049 in August 2022 to £2,150 in April 2024.
Despite the steep increase, Wendel was denied access to a more affordable four per cent interest rate mortgage last year after being told she "couldn't afford it".
She said: "It's a constant, daily battle to get up and get on with the day knowing that at the end of it there's nothing to show for it other than being able to maintain the roof over my head."
The situation has left her "at breaking point", forcing her to work constantly with "no home life whatsoever" to meet the payments.
She's now contemplating selling her home, saying: "Part of me feels that's giving up, but equally I can't afford to keep doing what I'm doing."
She already paid more than £91,000 in interest only mortgage repayments while still owing the full £284,000 she borrowed in 2007.
Initially on a repayment mortgage, the couple were advised by a broker to temporarily switch to an interest-only deal to fund an extension. However, Northern Rock's collapse nine months later led to their loan being sold on.
Since then, Wendel has been unable to secure a more favourable mortgage deal due to stricter lending criteria.
She has been struggling to manage the payments alone since 2016, with interest rate rises since December 2021 pushing her to the financial limit.
Livermore said the Government would continue monitoring the issue by "listening to those borrowers affected" and engaging with regulators and industry.
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He stated that previous scrutiny had produced sufficient information, including two National Audit Office reports and a Public Accounts Committee report.
The Green Party's Baroness Bennett of Manor Castle criticised the Treasury's understanding, saying there was a sense they "didn't grasp the issue".
But Livermore promised the Government would work with regulators to properly consider proposals from a London School of Economics report.
He said: "However, given the volume of information already in the public domain, we do not believe a further inquiry would provide any significant new information or additional support to those affected."
The Bill received a second reading but is unlikely to become law without Government support.
Livermore outlined existing protections for vulnerable mortgage holders, emphasising that Financial Conduct Authority rules require firms to provide individualised support.
He noted that lenders can waive certain regulatory requirements when assessing affordability for borrowers who maintain their repayments. This applies specifically to the cohort of mortgage prisoners discussed in the debate.
The minister highlighted that mortgage lenders, including inactive firms, are now subject to the consumer duty rules. These regulations ensure "firms prioritise fair treatment and good outcomes for their customers," he said.
Damon Parker, senior partner at law firm Harcus Parker, which represents mortgage prisoners, countered: "Tens of thousands of mortgage prisoners are still stuck on these high interest rates through no fault of their own.
"It is our contention that these people have been terribly financially exploited and deserve recompense."
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