London Mayor Sadiq Khan has warned the capital faces “a wave of repossessions” and asked the government to step in to help homeowners.
He said the government must use Friday’s mortgage summit, called by Chancellor Jeremy Hunt who has asked the bosses of Britain’s banks to Downing Street to discuss the crisis, to “work with lenders to come forward with a series to measures that will prevent Londoners from losing their homes”.
In a letter to Chancellor and the Secretary of State for Levelling Up, Housing and Communities Michael Gove, Mr Khan said: “Some Londoners are now at serious risk of losing their homes, causing huge stress and anxiety for many households in the capital.
“Mortgage rates are now routinely in excess of 6 per cent.
“Homeowners coming to the end of fixed-rate deals face exorbitant increases in their monthly outgoings, and it is sadly inevitable that many people will be unable to manage the jump in payments.
“Without support there is a risk of rising arrears and ultimately, a wave of repossessions.
Mr Khan called for “flexibility” in mortgage deals giving people “breathing space over repayments” and said a “two year voluntary moratorium on repossessions” would help homeowners until rates came down.
He also said people needed “access to timely and trusted advice” and called for the government to “relaunch” the Mortgage Rescue Scheme which allowed people to stay in their own home as a tenant of a social landlord.
His comments come as Labour unveiled plans to force banks to help mortgage holders by making them wait at least six months before starting repossession proceedings under a five-point plan set out by shadow chancellor Rachel Reeves.
The Opposition is also urging the Government to compel lenders to allow borrowers to temporarily switch to interest-only payments or lengthen their mortgage period.
It comes as the Bank of England is expected to raise the base interest rate by at least 0.25 points to 4.75%, leading to another hike for many mortgage payers.
Annual mortgage repayments are set to rise by £2,900 for the average household remortgaging next year, according to economists at the Resolution Foundation.
But Downing Street made clear the Chancellor will not be forcing lenders to take action at the summit on Friday.
The Prime Minister’s official spokesman said: “We’re not seeking to intervene in commercial decisions for banks offering mortgages.
“We want banks to be offering the best possible products to consumers, that’s in everyone’s interest. And so we will be looking to dig into what more they can be doing in this space.”
A Treasury spokesperson said: “We know this is a concerning time for mortgage holders. Lenders are already required to engage individually with their customers who are struggling to provide support that is tailored to their circumstances.
“Support could include extending a person’s mortgage term to reduce monthly payments, offering a switch to interest only payments, payment deferrals, rate discounts, or part interest-part repayment.”
