Mortgage rates: New wave of 'mortgage prisoners' could return and it's down to THIS - Express.co.uk

Mortgage rates: New wave of ‘mortgage prisoners’ could return and it’s down to THIS – Express.co.uk

Mortgage prisoners aren’t a new brand of prisioners – the first wave of these came during the 2009 financial crisis. Becoming a mortgage prisoner is a result of people borrowing heavily but only putting down small deposits. There is a major fear that the number of people trapped as mortgage prisoners could increase – currently there are about a million mortgage prisoners out of 3 million households on a lender’s SVR. Lack of awareness among borrowers, falling housing prices and an explosion in the amount of low deposit, high “loan to value” deals are to blame for this issue.

Key Takeaways:

The housing boom, between 2005 and 2007, saw home buyers borrowing large amounts, depositing much smaller amounts, and becoming mortgage prisoners.
House prices fell, lenders got stingy, and buyers were forced to go with more expensive deals.
Wooing new buyers with initial small deposits is on the rise again, potentially leading to another wave of mortgage prisoners.

“Being in negative equity while stuck on an SVR is a dangerous situation for anyone.”