The new Chancellor, Jeremy Hunt, recently held a Treasury meeting with leaders of the financial sector to discuss how mortgage holders can be supported through the cost-of-living crisis. The Financial Times reports that among the attendees were the Chair of the Financial Conduct Authority (FCA), as well as leaders of some of the UK’s high street lenders.
As inflation continues to rise, and energy and grocery bills jump at the fastest rate for 40 years, many middle- and low-income households are struggling to make ends meet. The situation is feared to get even worse in spring 2023, as energy bills are set to rise again, along with inflation.
Average mortgage interest rates have also doubled for most fixed-term two- and five-year mortgage deals, although they are slowly starting to fall, after a peak of well over 6% in October. The FCA have set out ways in which lenders can help to ease the financial strain for their customers.
This includes taking a more flexible approach to extending mortgage terms. It is now possible to take out a mortgage term up to the age of 75, which could potentially stretch out the repayment period for many current householders, thus lowering the cost of monthly repayments.
Other approaches include offering a temporary period of interest-only repayments, which will mean a much lower monthly outgoing. However, the mortgage will still need to be repaid in full at some stage. Lenders may also offer a different interest rate to customers, or make an allowance for a period of reduced monthly payments.
Mr Hunt also confirmed that those people receiving Universal Credit may be able to get help with monthly mortgage interest repayments after three months, in a press release.
Debbie Crosbie, CEO of Nationwide Building Society, said: “We are a mutual and helping members buy and stay in their home is central to what we do. We’ve reduced rates for those reaching the end of their deals so they can access a fixed rate below 5%, regardless of LTV or tenure.”
She added: “For additional support, our options include term extensions and forbearance tailored to individual circumstances. We’ve also given an additional £1 million to debt charities and partners to support people in financial hardship.”
Matt Hammerstein, CEO of Barclays UK, said: “We are committed to helping every borrower manage their repayments while adjusting to the current environment.”
He added: “The announcements made by the Government and mortgage lenders today to ensure support is available for those who may or do encounter challenges making mortgage payments, both now and in the future, are a critical part of that.”
The government said that they would continue to work closely with mortgage lenders and the FCA, to put further measures in place to support householders. Anyone struggling to meet their monthly repayments is strongly advised to talk to their lender in the first instance.
If you would like to speak to a mortgage broker for defaults, please get in touch today.
Your home may be repossessed if you do not keep up with your mortgage repayments.
There may be a fee for mortgage advice. The actual amount you pay will depend on your circumstances. The fee is up to 1% but a typical fee is £595.
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