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Jeremy Hunt claims the ‘government will do what it takes’ to tackle inflation
Mortgage-holders will be offered a series of steps to help them deal with the hike in interest rates that leaves some facing extra payments of thousands of pounds a month, the chancellor has announced.
After a key meeting with lenders, Jeremy Hunt unveiled new measures including the ability to talk to their bank or building society without it affecting their credit score.
Mr Hunt, who resisted offering borrowers government support, said banks and building societies had agreed to implement a 12-month minimum term before repossessing homes.
And he said the lenders would allow struggling borrowers to extend the term of their mortgages or move to an interest-only plan temporarily, “no questions asked”.
The chancellor met the bosses of HSBC, Santander and Barclays among others, after a 0.5 percentage-point base-rate hike threatened further pain for struggling households.
He stressed that tackling stubbornly high inflation, which is behind the Bank of England’s repeated rate rises, is the “number one priority”.
Earlier, Downing Street doubled down on its pledge not to directly intervene to help mortgage holders struggling with spiralling costs.
Chancellor unveils new measures to help mortgage borrowers
Mortgage-holders will be offered new steps to help them deal with the hike in interest rates that leaves some facing extra payments of thousands of pounds a month, the chancellor has announced.
After a key meeting with lenders, Jeremy Hunt unveiled new measures including the ability to talk to their bank or building society without it affecting their credit score.
Borrowers will also be able to switch to interest-only loans or extend their mortgage, he said.
Jane Dalton23 June 2023 13:19
In full: The measures lenders have agreed
The full measures agreed by lenders are:
- Customers approaching the end of a fixed-rate deal will have the chance to lock in a deal up to six months ahead, and may also apply for a better deal right up until their new term starts, if one is available.
- Borrowers may 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. 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.
- Lenders should provide “well-timed” information to help homeowners plan should their current rate be due to end.
- Lenders will offer tailored support for anyone struggling and deploy highly trained staff to help customers. This could mean extending their term to reduce their payments or offering a switch to interest-only payments, as well as options such as a temporary payment deferral or part interest-part repayment deal.
- Anyone worried about their mortgage repayments can call their lender for information and support, without any impact on their credit score.
- Borrowers will not be forced to have their homes repossessed within 12 months from their first missed payment.
Jane Dalton23 June 2023 20:54
The choices facing desperate homeowners
ICYMI: Many households across the UK are sitting on a mortgage ticking time bomb:
Jane Dalton23 June 2023 18:35
What new mortgage measures mean for borrowers
Jeremy Hunt and major banks agreed measures to help ease the pain of rising rates. Vicky Shaw looks at what this means for people who are struggling with their mortgage payments:
Jane Dalton23 June 2023 17:50
The mortgage crisis in figures
Financial markets are predicting that interest rates will hit a high of 6% by the end of the year.
There have been warnings that 1.4 million mortgage holders will lose at least a fifth of their disposable income in additional repayments.
They are set to rise by £2,900 for the average household remortgaging next year, according to economists at the Resolution Foundation.
More than 80 per cent of homeowners with a mortgage are on fixed-rate deals, according to trade association UK Finance.
However, around 2.4 million fixed-rate mortgage deals are due to end before the end of next year, with some potentially heading for a bill shock.
Jane Dalton23 June 2023 17:05
Martin Lewis blasts banks for ‘outrageous’ delay in better saving rates
Consumer campaigner Martin Lewis says it seems “absolutely outrageous” that rates for savers are lagging behind rates for mortgage borrowers:
Jane Dalton23 June 2023 16:30
‘Sticking plaster for gushing wound’
Liberal Democrat Treasury spokeswoman Sarah Olney branded Jeremy Hunt’s deal with lenders as “a sticking plaster for a gushing wound”.
“Even after today, bailiffs will still be knocking on people’s doors because the Government refused to help,” she said.
The SNP’s Social Justice spokesperson David Linden welcomed action on repossessions but described the measures as “paper thin”.
Jane Dalton23 June 2023 15:59
Tories must take responsiblity for crisis they created, say Labour
Shadow chancellor Rachel Reeves slated the “weak” response from the government on “a mortgage crisis they created”.
It shows just how little they understand what families are facing, she claimed.
“Questions remain on how voluntary these measures are. The government must offer clarity and confidence to homeowners by putting in place requirements now to reassure households.
“Instead of shrugging their shoulders, the Tories should be taking responsibility and acting now.”
Jane Dalton23 June 2023 15:34
There is only one cure for our runaway inflation: we need to trigger a recession
The Bank of England has failed to get a grip on spiralling prices – only drastic measures can now set the economy on the right course, writes Chris Blackhurst.
Read Chris’s full piece here:
Matt Mathers23 June 2023 15:07
Interest rates blame game erupts between Tories and Bank of England
In case you missed it: An extraordinary blame game erupted after the Bank of England was forced to hike interest rates to their highest level in almost 15 years:
Jane Dalton23 June 2023 14:45
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