The UK government made a £2.4bn “profit” when it pushed tens of thousands of mortgage borrowers “into poverty” after selling their loans on to new lenders, the campaigner Martin Lewis has claimed. The MoneySavingExpert founder was speaking at the launch of a report, which he funded, into the plight of “mortgage prisoners”: a group of borrowers caught up in the fallout from the 2007-08 financial crisis. Many originally took out their home loans with lenders that had to be rescued during the crisis, including Northern Rock and Bradford & Bingley, and subsequently had their mortgages sold on to providers that did not offer new deals – leaving some trapped on high interest rates and unable to move to a cheaper product. However, the number of people who fall into the category of mortgage prisoner appears to be disputed. MoneySavingExpert has suggested the number is 200,000. However, in late 2021, the Financial Conduct Authority said that while there were an estimated 195,000 households whose debts had been sold on to “inactive” lenders, the number “who are mortgage prisoners” was 47,000. These people were up to date with payments, but unable to switch because either their mortgage or their circumstances would deter a lender. The new report from the London School of Economics and Political Science (LSE), commissioned by MoneySavingExpert, claimed that Office for Budget Responsibility documents confirmed that “the taxpayer has substantially recovered all actual and opportunity costs suffered,” and indicated that the sale of the loans to inactive lenders “had generated a £2.4bn surplus”. It added: “It might well be argued that this gives sufficient headroom to allow government to step forward and help struggling borrowers.” MoneySavingExpert said the mortgage prisoners “have suffered financially, mentally and physically for more than a decade”. It added: “In the past year, near-monthly rate rises have seen some prisoners’ rates leap from 4.5% to as much as 8.29%. Groups representing mortgage prisoners have told MSE that some have even sadly taken their own lives.” The report proposes solutions that it estimated could cost between £50m and £347m over 10 years, depending on take-up. Lewis said: “This report lays out starkly that the state sold these borrowers into poverty … and made billions doing it. The result has destroyed lives. People have been left in financial, physical and mental misery, exacerbated by the pandemic and cost of living crisis ripping through their already dire situations.” In a statement, the Treasury did not directly address the claims about the £2.4bn surplus, but a spokesperson said: “We have already taken steps with the FCA to update mortgage lending rules, removing the barrier that prevented some mortgage prisoners from being able to switch.” They added: “We are open to further practical and proportionate solutions to help mortgage prisoners, working with the FCA and industry to carefully consider all proposals put forward.” It is understood the Treasury takes the view that there are a number of different reasons why these people may not be able to switch, and that the pricing and availability of mortgages is ultimately a commercial decision for lenders. An FCA spokesperson said: “We recognise the difficult circumstances faced by affected mortgage borrowers, who cannot switch and could benefit from doing so. We removed regulatory barriers to switching and set clear expectations for firms to support borrowers in financial difficulty and the fair treatment of vulnerable customers.”