Dear Resident,
I hope you are well.
Families across the UK, including families here in Scunthorpe have been affected by the high levels of inflation. This is why it is the Government’s aim to halve inflation this year, helping with the cost of living and bringing back the value of your hard-earned cash.
In order to reduce inflation, the Bank of England, which is independent of the Government, has increased interest rates, which is impacting heavily on some people with mortgages. This, in turn, is also having an impact on some renters as well.
To help with these pressures, the Chancellor of the Exchequer, Jeremy Hunt MP, is working on a series of measures to help people deal with the increase in their mortgages. The Chancellor introduced the new Mortgage Charter in the House of Commons. Please find below a detailed outline of yesterday’s statement made by the Chancellor and the measures announced for mortgage holders.
Yesterday's Statement
The Bank of England continues to independently take measures to reduce inflation. On Friday, the Chancellor met with principal mortgage lenders and senior representatives from the Financial Conduct Authority to agree support for people struggling with mortgage payments. At this meeting, 85% of all mortgage lenders covering the UK market signed a new mortgage charter, providing support for those worried about their mortgage repayments, as well as those who are at a real risk of losing their homes because they fall behind in their mortgage payments.
Tackling inflation remains the Government’s number one priority, with its aim remaining to resolve inflationary pressures.
To see the Chancellor’s statement in full, please watch the video below:
The Chancellor's Mortgage Charter
Within the new Charter, all lenders have agreed that anyone worried about their mortgage repayments can contact their lender for help and guidance without any impact on their credit file. You are encouraged to contact your bank, who are there to help.
There will be 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.
Further, lenders will provide well-timed information to help customers plan ahead should their current rate be due to end, and 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, offering a switch to interest only payments, but also a range of other options like a temporary payment referral or part interest-part repayment. The right option is dependent on your circumstances.
Additionally, those lenders who have signed the Charter have agreed that from 26th 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.
With effect from 10th July, customers approaching the end of their fixed rate deal have the chance to lock in a deal up to six months ahead. They will also be able to manage their new deal and request a 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 (FCA) and the Government permits that customers who are up to date with their payments will be able to either 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.
These options can be taken by customers who are up to date with their payments without a new affordability check or affecting their credit score. Customers who are currently in arrears should continue to work with their lender for the support that they need.
In addition, UK Finance, the trade association for mortgage lenders, will be introducing a communications campaign to ensure customers know what to expect when they need support from their lender.
Final Thoughts
The Mortgage Charter introduced yesterday is welcome news for those concerned about their mortgage repayments. I believe that this new Charter, alongside the pre-existing support provided by the Government in addressing cost of living will support struggling households who need it most, while managing to tackle inflation that will provide long-term relief for residents.
If residents need any further clarification on the Mortgage Charter announced, or need assistance in accessing any support, please do get in touch with me.
My team and I will do whatever we can to help.
Best regards,
Holly