The Chancellor of the Exchequer had a roundtable with the
Financial Conduct Authority, , and banking CEOs.
Readout:
Rising inflation, driven by Putin’s illegal war in Ukraine, has
caused interest rates to rise around the globe. As a result,
mortgage rates are causing particular concern for some mortgage
holders.
The Autumn Statement showed that the United Kingdom is not going
to spend money it does not have and is committed to repaying its
debts. Since then, external data shows that average two and
five-year fixed-rate mortgages now have an interest rate of below
6% for the first time in two months.
Interest rates are rising across the globe. The Bank of England,
European Central Bank and Federal Reserve all increased their
interest rates by a further 75bps in recent weeks in response to
rising prices.
This afternoon the Chancellor of the Exchequer met leading banking CEOs, with
consumer champion and the Financial Conduct
Authority, to press lenders to do all they can to support those
struggling with mortgage payments.
The banking CEOs, which cover over 70% of the market, recommitted
to protect mortgage holders by:
- Enabling them to switch to a new fixed rate mortgage, without
a new affordability test, when their current deal ends if
consumers are up to date with their payments. This covers 97% of
the market.
- Providing them with well-timed information ahead of any
change to rates.
- Offering specific help to those who start to struggle with
payments for example by extending the term of the mortgage to
make monthly payments lower, a short term reduction in monthly
payments or accepting interest-only payments for a period.
- Ensuring highly trained and experienced staff are on hand to
help.
Chancellor of the Exchequer, said:
“Global factors are driving inflation here at home, and my number
one priority is to do what I can to bring it under control.
“UK lenders have a part to play in that. We expect every
lender to live up to their responsibilities and support any
mortgage borrowers who are finding it tough right now.”
, founder of
MoneySavingExpert.com, said:
“The major concern for people’s mortgages – and the knock on
impact of mortgage increases on rents – is the situation in the
spring, when we expect interest rates to be higher, energy prices
to be rising, and other cost of living impacts.
"So the most important thing is that now the conversations have
started about what flexibility and forbearance measures can be
put in place to help those struggling. The commitments today set
a good direction, and after helpful conversations I’m hopeful
that further progress will be made. For those worried about
making mortgage repayments, the sooner you communicate with your
lender the better."
The roundtable also comes as the FCA has published new guidance
clarifying the flexibility lenders have to help borrowers manage
their monthly payments and further information for borrowers on
the options and support available to them.
Mortgage lenders, the FCA and the Government will continue
working closely together to ensure that the mortgage market works
well for all homeowners, in particular those facing financial
difficulty.
Discussions will continue to take place with lenders on what more
they are able to do to inform and support their customers going
forward.
