"While we have a range of support measures in place already, the new Mortgage Charter aims to provide further clarity and reassurance."
The government has launched a new Mortgage Charter, with lenders agreeing to provide a set of universal standards to help and reassure borrowers worried by high interest rates.
Last week, the Chancellor met with the UK’s largest mortgage lenders, UK Finance and the FCA to agree new commitments to support struggling borrowers.
As a result, all lenders have agreed:
• Anyone worried about their mortgage repayments can contact their lender for help and guidance, without any impact on their credit file.
• Support for customers who are up-to-date with payments to switch to a new mortgage deal at the end of their existing fixed rate deal without another affordability check.
• Tailored support for anyone struggling, which could include extending their term to reduce their payments, offering a switch to interest-only payments, but also a range of other options like a temporary payment deferral or part interest-part repayment.
• From 26th June, a borrower will not be forced to leave their home without their consent unless in exceptional circumstances, in less than a year from their first missed payment.
• With effect from 10th July customers approaching the end of a fixed rate deal will have the chance to lock in a deal up to six months ahead. They will also be able to manage their new deal and request a better like for like deal with their lender right up until their new term starts, if one is available.
In addition, the government says it has delivered action to make Support for Mortgage Interest easier to access. Borrowers on Universal Credit can now receive help with mortgage interest payments after three months.
The FCA will work with signatories in order to adopt the necessary rules by Friday 30th June. The regulator added that Consumer Duty coming into force in July will also enable it to support implementation of the Charter by its signatories.
Lenders who have already signed the charter include the Big Six banks, Virgin Money, TSB, and a host of building societies, which together represent approximately 85% of the mortgage market.
The Nottingham CEO, Sue Hayes, commented: “This is a worrying time for many borrowers as the impact of successive base rate rises has put increasing pressure on household finances. We want to do everything we can to support customers through this period.
“While we have a range of support measures in place already, the new Mortgage Charter aims to provide further clarity and reassurance. We are pleased to be part of this unified approach.
“Our customers are always central to our thinking, and coming together with other banks and building societies at this time to make this commitment will ensure we can continue to meet their needs.”
Leeds Building Society CEO, Richard Fearon, said: “We are a purpose-led organisation putting homeownership within reach of more people and it is vital that our actions match our words when our members need us most.
“We give our full backing to this charter. It will give borrowers facing financial difficulty even more reassurance that we’ll stand by them.
“At Leeds we’ve already introduced a number of measures which have made a huge difference to borrowers, including not charging arrears fees since the Covid-19 pandemic and extending our product transfer window, and they will be strengthened by these additional commitments.”
