Over 30 lenders, collectively responsible for approximately 85 per cent of the mortgage market, have become signatories to a government charter to support mortgage borrowers.
The UK’s largest mortgage lenders and the Financial Conduct Authority have agreed with the chancellor a set of standards that they will adopt when helping residential mortgage borrowers who could be worried about higher rates.
The mortgage charter’s signatories, which include HSBC, Barclays and Santander, have agreed that, starting from June 26, borrowers 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.
Signatories also committed to allowing customers approaching the end of a fixed rate deal the chance to lock in a deal up to six months ahead, starting from July 10.
Under this commitment, customers 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.
The charter’s signatories also agreed to a new deal between lenders, the FCA and the government permitting customers who are up to date with their payments to either switch to interest-only payments for six months, or extend their mortgage term to reduce their monthly payments and give customers the option to revert to their original term within six months of contacting their lender.
These options can be taken out by customers who are up to date with their payments without a new affordability check or affecting their credit score.
The charter also extends beyond it's signatories, as it detailed that further lenders have agreed to provide well-timed information to help customers plan ahead should their current rate be due to end, and that anyone worried about their mortgage repayments can contact their lender for help and guidance, without any impact on their credit file.
Lenders also agreed to support 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.
A timely development
The charter’s publication comes "in light of the current pressures on households" with high inflation harming many people "right across the economy".
The charter recognised this context meant that it is a “concerning time for mortgage holders” and urged that lenders should come together to “give borrowers the necessary reassurance and support through these difficult times”.
These economic difficulties were also acknowledged by The Nottingham Building Society, one of the charter's signatories, with CEO Sue Hayes, saying: “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."
FCA chief executive, Nikhi Rathi, said: “This charter builds on the work we and lenders have done over recent years to ensure those who get into difficulty receive the support they need.
