Changes to mortgages announced to help households struggling with soaring interest rates

23 June 2023, 13:19 | Updated: 23 June 2023, 13:38

Jeremy Hunt met with mortgage providers today
Jeremy Hunt met with mortgage providers today. Picture: Alamy

By Asher McShane

A series of measures have been agreed with mortgage lenders aimed at supporting people who are struggling with their repayments.

Earlier today, banks met the Chancellor and agreed there will be a minimum 12 month period before a home is repossessed.

Borrowers will also be able to make a temporary change to their mortgage terms, for example by switching to an interest-only deal, then will be able to return to their original deal within six months without impacting their credit scores.

Chancellor Jeremy Hunt hailed the "important" agreements with banks and lenders.

"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," he said.

"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 of higher mortgage rates."

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The three measures:

  • Speaking to your bank if you are struggling has no impact on credit score
  • Change to interest only or extend mortgage term - for six months no questions asked
  • Minimum 12-month period before repossessions can occur

He said that banks and mortgage lenders had agreed "three very important things".

"The first is that absolutely anyone can talk to their bank or their mortgage lender and it will have no impact whatsoever on their credit score. That's really important. A lot of people worry about that.

"The second is that if you are anxious about the impact on your family finances and you change your mortgage to interest-only or you extend the term of your mortgage and you want to go back to your original mortgage deal, within six months, you can do so, no questions asked.

"No impact on your credit score. That, I think, is going to give people a lot of comfort and stop people worrying about having conversations with their banks when they are worried about their financial situation.

"The final thing is for people who are at risk of losing their home in that extreme situation, the banks and mortgage lenders have a number of things in place.

"The last thing that they want to do is to repossess a home, but in that extreme situation they have agreed there will be a minimum 12-month period before there's a repossession without consent."

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