Consumer champion Martin Lewis has said it will be a “nightmare year” for some, as people deal with rising mortgage or rental costs. The MoneySavingExpert.com founder said he expects to see increases in mortgage arrears and some people selling up.
He also said he is “very worried” for renters, adding that the rules for renters need to be looked at. Mr Lewis told ITV ’s Good Morning Britain: “It’s going to be a nightmare year.”
A new mortgage charter has been agreed by lenders representing around 85% of the mortgage market, following a meeting between Chancellor Jeremy Hunt and banks on Friday last week. Under the charter, lenders will allow customers who are up to date with their payments to switch to interest-only payments for six months or extend their mortgage term to reduce their monthly payments.
Borrowers will have the option to revert to their original term within six months by contacting their lender. 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.
Asked if he expects to see a big rise in home repossessions, Mr Lewis said: “No, I don’t think we will… for two reasons. One, because one of the agreements that was made at the meeting on Friday is banks will not look to repossess, unless the individual wants that to happen, for at least a year from the first missed payment. So there is a little bit of time being bought there.
“And two, because the courts are absolutely clogged up. Even if you started repossession proceedings now, from what I’m hearing it would take 18 months before they were heard.”
He continued: “I think we’re going to see some very substantial arrears… I think we’re going to see people voluntarily getting rid of their homes.
“I’m very worried for renters out there that they’re not able to afford to pay what they need. And that we really do need to look at what’s going on in the renting situation.”
He highlighted “inflation, prices are going up and the economy’s teetering on the brink of recession… And it is a nightmare scenario. And it is very difficult for any politician to know what to do. Or me, or you.”
Mr Lewis said: “The situation for renters is still one of those untapped, unsolved problems; of course much of that is also from the knock-on to the problems in the mortgage market.”
Asked what help struggling renters can get, Mr Lewis said there are rent advisers based at local councils and welfare centres. He said: “If you feel your rent is being put up in a way that is prohibitive and unfair, absolutely seek advice from a renting adviser, go talk to the local council, many councils will have renting officers, who can help with private rents.”
He said that landlords’ buy-to-let mortgage rates are being pushed up “and they’re trying to pass on the cost to the person who’s renting”. Mr Lewis added: “I welcome the mortgage forbearance measures… it’s not going to help everyone, what I hope it will do is just allow some people to get over the hump.
“I think we need to look at renting, we need to look at the rules for renters because it’s going to be a very difficult period for renters too.”
Mr Lewis has been pushing for banks to pass on interest rate rises in savings rates, which could also help with inflation by encouraging people to put their money away. “And we need to focus on savers… and if we give savers better rates then we might not need to continue to push rates up as high.”
Later, posting on Twitter, Mr Lewis said: “I said on @GMB (Good Morning Britain) today, in reference to new depressing stats on the numbers struggling to pay mortgages and rent, that it’s going to be a nightmare year for some.
“I’ve seen a few references here calling me a ‘prophet of doom’, the same attack phrase used by some last year when I was warning we needed energy intervention, again based on known facts of huge impending price hikes.”
He added: “To try to demonise a person explaining the situation and try and knock down anyone warning people to prepare seems a dangerous precedent… I hope I try and make positive practical suggestions. I won’t wear blinkers and a gag to the plight millions are facing.”
Figures released by Moneyfactscompare.co.uk on Tuesday showed the average two-year fixed-rate homeowner mortgage rate on Tuesday morning was 6.26%, edging up from an average rate of 6.23% on Monday. The average five-year fixed-rate homeowner mortgage on Tuesday morning was 5.87%, up from 5.86% on Monday.
Average fixed rates are still below the highs seen last autumn amid the market volatility which followed September’s mini-budget, with average two-year fixes hitting 6.65% on October 20 2022.
