Mortgage lenders and Chancellor Jeremy Hunt have agreed that people should be given a 12-month break before repossession proceedings start amid soaring interest rates.
After the rise of the base rate to 5%, Mr Hunt met with leaders of financial institutions including Lloyds, NatWest, Barclays and Virgin Money.
They agreed that the repossession break should be introduced – similar to the one implemented during COVID.
Politics latest: Chancellor meets with mortgage lenders after interest rate hike
Mr Hunt spoke after the Downing Street summit about an option for people to go to their banks or lenders and speak about their options, if they are struggling with repayments, without it having an impact on their credit rating – although this had been mentioned as early as March this year by the Financial Conduct Authority.
Mr Hunt said that people who change the length of their repayment term or go on to interest-only plans can reverse their decision within six months without it impacting their credit rating.
But there was no announcement of support for people who rent, who are facing landlords hiking prices or selling properties from under them due to rising mortgage costs.
The chancellor said: “There are two groups of people that we’re particularly worried about.
“The first are people who are at real risk of losing their homes because they fall behind in their mortgage payments.
“And 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 have higher mortgage rates.”
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There was never going to be an announcement on Friday about direct “bailout” style funding for those struggling with their mortgages.
Both the government and Labour agree that would risk fuelling inflation further.
So what we have instead is a beefing up of existing tools available to lenders and a reintroduction of some of the easements seen during the pandemic.
The difficulty may be that the sheer depth and length of this mortgage squeeze will likely still leave many wanting more from both the banks and the government.
Read Rob’s full analysis here.
Similar repossession holidays were introduced during the pandemic.
Sir Keir Starmer, the Labour leader, said the public were looking for “actions, not words”, when it came to their mortgages.
He said there are “many mortgage holders, many families, across the country who are now even more worried about paying their mortgage”.
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Labour: ‘People want action not words’
He said: “They know that the government’s been about for 13 years, they know the government crashed the economy last year.
“What they want, I think, is a much stronger sense that the government is gripping this; action, not words.”
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