Whilst the Government is actively committed to halving inflation by the end of 2023, the current pressure on household spend continues due to the impact of successive base rate rises. In recognising that this is a concerning time for mortgage holders, particularly those who are due to come to the end of their existing deal in the immediate term, the Government have committed to working even more closely with lenders to make sure borrowers are supported.
“…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.” Rt Hon Jeremy Hunt MP, Chancellor of the Exchequer
The Chancellor met with the UK’s largest mortgage lenders, UK Finance and the FCA on Friday the 23rd June. At this meeting, lenders agreed to new commitments in the 13-page Charter, to support borrowers at this challenging time. Lenders will supply specifically tailored support for anyone struggling with payments and provide well-timed information to help customers plan ahead. Anyone who is concerned about their mortgage payments are encouraged to contact their mortgage lender early, and this will not impact on their credit file.
The lenders have agreed:
- From 10 July, customers approaching the end of a fixed-rate deal will have the opportunity to lock in a deal up to six months ahead. They will also be able to manage their new deal and request a better like-for-like deal with their lender right up until their new term starts, if one is available.
- A new deal between lenders, the Financial Conduct Authority and the government permitting customers who are up to date with their payments to:
Switch to interest-only payments for six months, or
Extend their mortgage term to reduce their monthly payments and give customers the option to revert to their original term within six months by contacting their lender.
- From 26 June, a borrower will not be forced to leave their home without their consent unless in exceptional circumstances, in less than a year from their first missed payment.
Lenders who have signed up to the charter are:
- Aldermore Bank
- Bank of Ireland UK
- Bath Building Society
- Buckinghamshire Building Society
- The Co-operative Bank, including Platform and Britannia
- Coventry Building Society
- Danske Bank
- Darlington Building Society
- Earl Shilton Building Society
- Ecology Building Society
- Family Building Society
- Furness Building Society
- Glasgow Credit Union
- Hinckley & Rugby Building Society
- HSBC, including First Direct
- Kensington Mortgage Company
- Leeds Building Society
- Leek Building Society
- Lloyds, including Halifax and Scottish Widows
- Loughborough Building Society
- Melton Mowbray Building Society
- Metro Bank
- Monmouthshire Building Society
- Nationwide Building Society
- Natwest, including RBS and Ulster Bank
- Newbury Building Society
- Newcastle Building Society
- Nottingham Building Society
- Principality Building Society
- Progressive Building Society
- Scottish Building Society
- Skipton Building Society
- Suffolk Building Society
- Teachers Building Society
- Tipton & Coseley Building Society
- TSB, including Whistletree
- The Vernon Building Society
- United Trust Bank Limited
- Virgin Money, including Clydesdale Bank and Yorkshire Bank
- West Bromwich Building Society
- Yorkshire Building Society
These lenders represent approximately 90% of the mortgage market.
In addition, the FCA has introduced:
- new guidance clarifying how lenders can support borrowers impacted by the rising cost of living
- information for borrowers on the options and support available if they are struggling with payments
In order that borrowers are made aware of what to expect when they need support from their lender, UK Finance will be launching a communications campaign. Whilst many lenders have existing plans in place, the Charter builds on this existing support and helps reassure mortgage holders that there are a number of government backed options available if they are concerned about meeting their repayments.