Chancellor Jeremy Hunt has unveiled new measures to help struggling mortgage holders - but there will be no bailout from the government. Speaking after a summit with high street bank chiefs, Mr Hunt set out a new plan to help homeowners struggling after the latest interest rates hike, The Mirror reports.
People battling to pay their mortgages will be able to go to their banks or lenders and speak about their options, without it impacting their credit score, Mr Hunt said. And those who change the length of their repayment term or go onto interest-only plans can reverse this decision within six months without it impacting their credit rating.
Mortgage lenders have also promised to introduce a 12-month waiting limit before they start repossessions. But Mr Hunt stopped short of announcing any direct support from the Government for mortgage holders, which both Tory ministers and Labour believe risks fuelling inflation.
Crunch negotiations were held with high street bank chiefs on Friday, June 23 after the Bank of England hiked interest rates to 5%. The Bank of England is trying to slash high inflation by increasing the base rate - which influences interest rates lenders charge for mortgages, loans and other types of credit.
Mr Hunt told broadcasters: "There are two groups of people that we are particularly worried about. The first are people who are at real risk of losing their homes because they fall behind in their mortgage payments.
"The second are people who are having to change their mortgage because their fixed rate comes to an end, and they're worried about the impact on their family finances of higher mortgage rates."
Mr Hunt said that tackling high inflation was the "number one priority" for the Prime Minister and himself.
He said: "We know the pressure that families are feeling. That's why we've introduced big support packages, around £3,000 for the average household this year and last.
"We will do what it takes and we won't flinch in our resolve because we know that getting rid of high inflation from our economy is the only way that we can ultimately relieve pressure on family finances and on businesses." But he resisted giving into calls from some Tory backbenchers to offer a major support package to mortgage holders, fearing it could further fuel inflation.
Shadow Chancellor Rachel Reeves said the Government needed to take greater responsibility "instead of shrugging their shoulders".
She said: "Today's weak response from the Government on a mortgage crisis they created shows just how little they understand what families are facing.
“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.
“Labour's five-point plan to ease the Tory mortgage penalty offers practical help now, while our commitment to fiscal responsibility and growth will secure our economy for the future.
“Instead of shrugging their shoulders, the Tories should be taking responsibility and acting now.”
Liberal Democrat Treasury spokesperson Sarah Olney said: "This is 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.
"Struggling families still face the looming prospect of losing their homes because the Government crashed the economy and sent mortgage bills spiralling.
"Britain is facing a mortgage crisis and we have a Chancellor who simply isn't up to the job. Jeremy Hunt is failing on his inflation target and now failing to help families with the consequences.
"It adds insult to injury that there is still no help for renters who face unbearable payments. Jeremy Hunt is failing families and pensioners. If he is not going to take decisive action then he should step aside."
