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A mortgage prisoner is someone who is up to date with their mortgage payments but cannot switch to a cheaper deal, either with a new lender or their existing one, because of how mortgage lending rules or their lender’s situation have changed since they took out their mortgage. The term is used by the Financial Conduct Authority (FCA) and consumer groups to describe people who are paying more than they need to, despite having kept up their payments.
Being a mortgage prisoner is not about arrears or missed payments. It is specifically about being stuck on an uncompetitive rate, often a lender’s standard variable rate, while being unable to access deals generally available elsewhere.
How someone becomes a mortgage prisoner
Most mortgage prisoners fall into one of two groups. Some have mortgages with inactive lenders: firms that are authorised to hold mortgages but no longer offer new lending, so there is no internal deal to switch to. Others have mortgages that were sold to, or are administered by, unregulated entities that are not authorised to lend at all, which also means no internal switching option.
On top of this, tighter affordability rules introduced after the 2008 financial crisis mean some borrowers who could previously have remortgaged easily no longer pass a full affordability assessment with a new lender, even though they have never missed a mortgage payment. This combination, an inactive or unregulated lender plus stricter new rules, is what leaves people unable to move.
Why lending rules made this harder
Following reviews after the financial crisis, mortgage lending rules were tightened to make sure new borrowing was properly affordable, including stress testing against higher interest rates. This was designed to protect new borrowers, but it had a side effect: some existing borrowers with an established, affordable payment history under their current terms did not pass the same test when assessed as if they were a new applicant, particularly where their income, circumstances or the wider interest rate environment had changed.
What changed from 2019
Recognising this problem, the FCA introduced rule changes to help borrowers in this position. From October 2019, lenders have been able to use a modified affordability assessment for customers who meet certain conditions, rather than the full assessment normally required for a new mortgage. The FCA has continued to review this issue since, including further work looking specifically at borrowers with inactive lenders, so it is worth checking for updates rather than assuming the 2019 changes are the final word.
If being stuck on a high standard variable rate has made your payments genuinely difficult to afford, that is a different and more urgent problem than being unable to switch to a cheaper deal. Read what to do if you can’t pay your mortgage alongside checking whether the modified affordability assessment could apply to you.
The modified affordability assessment
Under the modified assessment, a lender can consider switching a borrower to a new deal, with that lender or in some cases a new one, based mainly on their track record of managing their existing mortgage, rather than a full new-customer affordability check. This generally applies where the borrower:
- is up to date with their current mortgage payments
- is not looking to borrow more, other than to cover certain permitted fees
- is not moving home as part of the switch
This does not guarantee a switch will be offered or approved. It changes what a lender is allowed to assess, not what it must agree to. Research at the time suggested roughly 170,000 borrowers with mortgages held by inactive lenders or unregulated entities could be eligible to benefit from the change, though not everyone in that position has necessarily used it.
| Situation | Likely to help |
|---|---|
| Mortgage with an inactive lender, up to date with payments | Modified assessment may apply |
| Mortgage with an unregulated entity, up to date with payments | Modified assessment may apply |
| Currently in arrears | Modified assessment is unlikely to apply; forbearance is the relevant route instead |
| Wanting to borrow more or move home | Full affordability assessment is generally still required |
This table is a general guide, not a decision. Whether the modified assessment applies to you depends on your lender and your own circumstances.
What to do if you think you might be a mortgage prisoner
- Check who currently holds or administers your mortgage, since this affects whether an internal switch is even possible.
- Ask your current lender or administrator directly whether a modified affordability assessment applies to your account.
- Speak to a mortgage broker experienced with this situation, since not every broker deals with it regularly.
- Get free guidance from MoneyHelper if you are unsure where your mortgage sits or what your options are.
What this means for a bad credit remortgage
If adverse credit has built up while you have been unable to switch, for example because payments became harder to manage on a high standard variable rate, our hub pages on remortgaging with a low credit score and remortgaging with mortgage arrears explain how lenders generally view different types of credit history. If your deal has already ended and you are trying to work out your options more broadly, what if you can’t remortgage when your deal ends covers the wider picture, and product transfers with bad credit looks specifically at staying with your existing lender where that is possible.
Not everyone stuck on a high rate is technically a mortgage prisoner in the FCA’s sense, and rules have continued to evolve, so it is worth checking your specific position rather than assuming nothing can be done.
Frequently asked questions
Am I a mortgage prisoner if I have arrears?
Not in the sense the FCA uses. The term generally describes borrowers who are up to date with payments but cannot switch to a cheaper deal. If you have arrears, mortgage forbearance and speaking to your lender are the more relevant options.
What is the modified affordability assessment?
A rule change from October 2019 letting some lenders assess a switch mainly on a borrower's track record of managing their current mortgage, rather than a full new-customer affordability check, for people up to date with payments who aren't borrowing more or moving home.
How do I find out who holds my mortgage?
Your annual mortgage statement or your original offer letter should show the current lender or administrator, though this can change over time if your mortgage has been sold on. If it has changed since you took the mortgage out, contacting the current holder directly is the best way to check your options.
Does being a mortgage prisoner guarantee I can switch?
No. The modified affordability assessment changes what a lender is allowed to consider when assessing you, not what it must approve. Each lender still decides whether to offer you a switch, based on your account, your payment history and its own criteria at the time you apply.
What should I do if I think I'm stuck on a high rate?
Ask your current lender or administrator directly whether a modified affordability assessment applies to your account, and speak to a mortgage broker experienced with this specific situation, since not every broker deals with it regularly. MoneyHelper offers free, independent guidance if you're unsure where to start looking.