Working closely with some of the UK’s largest mortgage lenders, the Government has launched a new Mortgage Charter to support struggling borrowers with their mortgage repayments on their own homes. What support could you access on your residential mortgage?
This week, the Government launched a new Mortgage Charter to support homeowners with their mortgage repayments. Leading mortgage lenders have agreed to provide a new set of universal standards to reassure borrowers over higher interest rates and help in general with their mortgages.
Last week, Jeremy Hunt met with the UK’s largest mortgage lenders, UK Finance, and the FCA to develop and agree on new commitments to form the Charter and better support struggling borrowers. The new agreement includes:
- Anyone who is concerned about their mortgage repayments can contact their bank or mortgage lender for support and guidance without impacting their credit report.
- Lenders will (where applicable) provide tailored support to anyone struggling. This could include extending the overall mortgage term to reduce monthly repayments, offering a switch to interest-only payments, as well as plenty of other options to help borrowers mitigate rising costs.
- Borrowers cannot be forced to leave their home without their consent (unless in exceptional circumstances) in less than a year from their first missed mortgage payment.
- As of the 10th of July, customers approaching the end of their fixed-rate deals will have the option to lock into a new product up to six months in advance. They will also be able to manage their new rate and request a better deal with the lender up until their new term starts if one becomes available.
In addition to the new Mortgage Charter, the Government has also worked to make Support for Mortgage Interest easier for borrowers to access. Similarly, borrowers on Universal Credit will now be able to receive support on their mortgage interest payments after three months.
As it stands, the Charter will support borrowers struggling with their home mortgage payments and is not yet extended to the buy to let sector.
When Will the New Mortgage Charter Come into Force?
The FCA is currently working with signatories to ensure the necessary rules will be adopted by this Friday the 30th of June. The regulator also notes that the Consumer Duty coming into force in July will better enable it to support the Charter’s implementation.
So far, lenders who have already signed up for the Charter include 'The Big Six’ high street banks, Virgin Money, TSB, and many other building societies. Together, these signatories represent approximately 85% of the residential mortgage market.
Industry Response to the New Mortgage Charter
Sue Hayes, CEO at the Nottingham, comments, “This is a worrying time for many borrowers as the impact of successive base rate rises has put increasing pressure on household finances. We want to do everything we can to support customers through this period.
“While we have a range of support measures in place already, the new Mortgage Charter aims to provide further clarity and reassurance. We are pleased to be part of this unified approach.
“Our customers are always central to our thinking, and coming together with other banks and building societies at this time to make this commitment will ensure we can continue to meet their needs.”
Leeds Building Society CEO, Richard Fearon, adds, “We give our full backing to this charter. It will give borrowers facing financial difficulty even more reassurance that we’ll stand by them.”
For further information on the new Charter, see the press release on the Government website here.
If you are coming up to your remortgage on your own home, or looking to purchase your next property, our team of residential experts are here to help. Submit an enquiry here, or call us on 0345 345 6788.
28th June 2023