Support measures have been agreed for those struggling with, or anxious about, their mortgage repayments.
A new mortgage charter was approved following a meeting of the Chancellor of the Exchequer, the UK’s principal mortgage lenders and the Financial Conduct Authority.
Three of the key measures
- Anyone concerned can talk to their bank or their mortgage lender and it will have no impact on their credit score.
- If you change your mortgage to interest only or you extend the term of your mortgage and you want to go back to your original mortgage deal, within six months you can do so, with no questions asked and no impact on your credit score. This will take effect within the next two weeks.
- There will be a minimum 12-month period before there’s a repossession without consent.
Chancellor Jeremy Hunt said: “These measures should offer comfort to those who are anxious about high interest rates and support for those who do get into difficulty.
“Tackling high inflation is the Prime Minister and my number one priority.
“We are absolutely committed to supporting the Bank of England to do what it takes. We know the pressure that families are feeling. That’s why we’ve introduced big support packages around £3,000 for the average household this year and last.
“But we will do what it takes, and we won’t flinch in our resolve because we know that getting rid of high inflation from our economy is the only way that we can ultimately relieve pressure on family finances and on businesses.”
Some promising figures
The latest market indicators (FCA; UK Finance) show that mortgage arrears and defaults remain below pre-pandemic levels, which were themselves extremely low.
The FCA reported 0.86 per cent of total residential mortgage balances in arrears in the first quarter of 2023 which is significantly lower than the 3.32 per cent rate in 2009.
The proportion of disposable income spent on mortgage payments is currently at 5.4 per cent, compared to around 10 per cent in the 1990s and prior to the financial crisis.
Do you need advice around mortgage payments? We can help.