Maria Miller welcomes the Chancellor’s Mortgage Charter, announced today (26th June), to support mortgage holders through this time of higher inflation.
Maria said ‘higher inflation, like what we are experiencing now following Covid, and high energy prices due to Putin’s invasion of Ukraine, are a worry for mortgage holders as interest rates increase. For that reason, the Government has agreed with the largest mortgage lenders, UK Finance and FCA to put a plan in place to support borrowers who need it.
‘Home owners make up the majority of people who live in Basingstoke – 60% - and 34% of Basingstoke residents have a mortgage or loan for their home. This support may be vital for people struggling with repayments and I urge anyone currently in difficulty to get in touch with their lender and discuss what options are available.’
Under the Mortgage Charter:
- Anyone worried about their mortgage repayments can call their lender for information and support, without any impact on their credit score and we would encourage you to contact your bank who are there to help.
- Customers won’t be forced to have their homes repossessed within 12 months from their first missed payment.
- Customers approaching the end of a fixed rate deal will be offered the chance to lock in a deal up to six months ahead. They will also be able to apply for a better deal right up until their new term starts, if one is available.
- A new agreement between lenders, the FCA and the government permitting customers to switch to an interest-only mortgage for six months, or extend their mortgage term to reduce their monthly payments and switch back to their original term within the first six months, if they choose to. Both options can be taken without a new affordability check or affecting their credit score.
- Support for customers who are up-to-date with payments to switch to a new mortgage deal at the end of their existing fixed rate deal without another affordability check.
- Providing well-timed information to help customers plan ahead should their current rate be due to end.
- Offer tailored support for anyone struggling and deploy highly trained staff to help customers. This could mean extending their term to reduce their payments, offering a switch to interest only payments, but also a range of other options like a temporary payment deferral or part interest-part repayment. The right option will depend on the customer’s circumstances.
Signatories to the Mortgage Charter cover 75% of the lending market.
Mortgage arrears and defaults remain below pre-pandemic levels, with just 0.86% of residential mortgage balances in arrears. Nonetheless, the recent increase in interest rates does put more pressure on some households making payments, which is why the Mortgage Charter can offer much needed breathing space and options in these circumstances.
UK Finance, the trade association for mortgage lenders, will soon begin a communication campaign to inform people as to what they can expect when reaching out to their lender for support, and the Financial Conduct Authority has issued new guidance to lenders on how they can best offer support to people struggling with rising cost-of-living.