Since the launch of the Mortgage Charter, the monthly payments on around 236,000 mortgages - around 2.7% of regulated mortgage contracts - have been reduced as people switched to temporarily paying interest-only or extended their mortgage term.
The FCA's latest data shows that only 744 term extensions were reversed, which could indicate that borrowers seeking a temporary reduction in their payments are more likely to opt for an interest-only period.
The Charter, introduced in June 2023, contains commitments, over and above FCA requirements, made by mortgage lenders. There are 49 signatories, representing around 90% of the mortgage market.
These commitments include:
- not to force a borrower to leave their home without their consent, unless in exceptional circumstances, in less than a year from their first missed payment,
- to allow customers to lock in a new deal up to six months ahead of the end of a fixed rate deal, and to request a better like-for-like deal up until the new one starts, if one is available,
- without assessing affordability, to permit customers who are up to date with their payments to switch to interest-only payments for six months, or to extend their mortgage term with the option to revert to their original term within six months.
In the latest three-month period (November 2024 to January 2025) around 280,000 mortgages locked into a new deal up to six months ahead of maturity; this compares to around 377,000 mortgages in the previous quarter.
In addition, the number of mortgages that, after locking into a new deal up to six months before maturity, subsequently locked into an alternative deal, fell from around 102,000 in August to October 2024 to around 27,000 in November 2024 to January 2025.
Around 164,000 mortgages have temporarily reduced monthly payments via the new FCA rules.
The latest figures also show that 186 properties were repossessed within 12 months of missing the first payment. Firms report these were for customer-driven reasons, for example voluntary possessions or abandoned/vacant properties.
