Closing summary
Our main story today: following yesterday’s half-point rise in interest rates, the UK chancellor, Jeremy Hunt, has announced three measures to help those struggling with mortgage payments – but did not announce any help for renters.
My colleague Alex Lawson writes:
Struggling mortgage holders will be given a 12-month grace period before their repossession proceedings begin, in an agreement between Jeremy Hunt and Britain’s biggest lenders.
The chancellor held a meeting with Britain’s biggest banks and building societies on Friday to ask if they could do more to support households facing a sharp rise in monthly payments on their mortgages after the Bank of England intensified its battle to tame high inflation by increasing interest rates by half a percentage point to 5% on Thursday.
Hunt said three measures had been agreed, including that consumers’ credit scores would not be affected by discussions with their bank or mortgage lender, and that those agreeing to change the terms of their mortgage – by switching to interest-only payments or extending the life of the loan – could return to their original deal within the first six months.
He said that, for those who were “at risk of losing their home in that extreme situation”, a 12-month grace period would be introduced.
Hunt said: “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 are worried about the impact on their family finances of higher mortgage rates.”
Consumer champion Martin Lewis said he was “pleased to see it looks like the chancellor has listened and those measures are going to be put in practice by the banks”.
Opposition parties Labour and the Lib Dems were not impressed however. Labour said the measures were “weak”. The party argues that mortgage lenders should be forced to allow borrowers to temporarily switch to interest-only payments or lengthen their mortgage period – an idea that the government has resisted.
The Lib Dems described the measures as a “sticking plaster for a gushing wound”.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said the “payment shock is only affecting a small percentage of homeowners but any help to reduce stress is positive”.
My only question is - is six months long enough? What’s going to change in six months’ time?
Thank you for reading. Have a fab weekend. We’ll be back next week. Bye! – JK
Updated
Consumer champion Martin Lewis, founder of MoneySavingExpert.com, said:
The unprecedented steep rise in mortgage rates is causing a nightmare for many with variable mortgages and those coming off fixes. Therefore, the most important thing we can focus on right now is appropriate, flexible forbearance measures. While the Bank of England’s aim is intended to squeeze people’s disposable incomes, no one wants people’s lives to be ruined by arrears and repossessions – and that is the urgent protection we need to focus on.
I met the chancellor on Wednesday and reiterated that the minimum we needed was to ensure that when people asked for help from lenders, they knew that if things changed, it wouldn’t be detrimental to their financial situation and their credit scores would be protected as much as possible.
I’m pleased to see it looks like the chancellor has listened and those measures are going to be put in practice by the banks. We need to make sure everybody knows their rights if they are in trouble with their mortgage, so they can feel comfortable speaking with their lender and understand the measures that they can request for help.
Nikhil Rathi, chief executive of the Financial Conduct Authority, said:
Today’s productive meeting builds on the work we’ve done over the last year to ensure those who get into difficulty receive the tailored support they need. We’ll move quickly to make any changes needed to support today’s commitments.
Here’s a couple more charts on the mortgage market.
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