New Deal: Homeowners struggling with mortgage payments will get help

2022-12-08

Cash-strapped homeowners who struggle with mortgage payments during cost of living crisis will get help under new deal

People struggling to pay their mortgages will get help from major banks
Deal negotiated by Jeremy Hunt has range of measures to help households
Banks will offer new fixed rates without affordability test for consistent payers
But Martin Lewis says the ‘major concern’ will be the spring for most people

Homeowners who run into financial trouble will be able to make reduced mortgage payments under a deal brokered by Chancellor Jeremy Hunt at a summit with bank bosses yesterday.

The Treasury said last night bank chiefs had agreed a series of measures to help struggling customers.

Those who run into difficulty with payments will be offered targeted help, which could include a ‘short-term reduction in monthly payments’, a temporary switch to interest-only payments or extension of the mortgage term to reduce monthly costs.

Banks also agreed that households coming to the end of their fixed rates should be offered a new deal without another affordability test, provided they have kept up with payments.

Chancellor Jeremy Hunt engineered a deal with major banks to offer support to those struggling to pay their mortgages

Banks also agreed that households coming to the end of their fixed rates should be offered a new deal without another affordability test, provided they have kept up with payments. This could help households to reduce the amount their mortgage increases by

Experts have warned that the surge in interest rates could force thousands of families into arrears in the coming months, with some at risk of having their homes repossessed.

Mr Hunt said control inflation was his ‘number one priority’.

He added: ‘UK lenders have a part to play in that. We expect every lender to live up to their responsibilities and support any mortgage borrowers who are finding it tough right now.’

Yesterday’s summit was also attended by consumer champion Martin Lewis, senior figures from the Financial Conduct Authority and bank chief executives representing 70 per cent of the mortgage market, including HSBC, Barclays, Lloyds, Santander, NatWest and Nationwide.

Mr Lewis said the biggest concern for most people was that interest rates would increase in the spring, pushing mortgage repayments even higher

Mr Lewis, founder of the Moneysavingexpert website, said the commitments set a ‘good direction’ but warned that more help would be needed.

‘The major concern for people’s mortgages – and the knock on impact of mortgage increases on rents – is the situation in the spring, when we expect interest rates to be higher, energy prices to be rising, and other cost of living impacts,’ he said.

‘So the most important thing is that now the conversations have started about what flexibility and forbearance measures can be put in place to help those struggling. For those worried about making mortgage repayments, the sooner you communicate with your lender the better.’

The meeting came as the FCA published new guidance to lenders confirming the flexibility they have to help struggling mortgage holders.

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