In his first meeting since taking office, Chancellor Jeremy Hunt met with chief executives from the UK’s largest banks, to make the case for providers to do all they can to support mortgage borrowers struggling to make payments during the cost of living crisis.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
Last week, Jeremy Hunt hosted a roundtable meeting with heads of major mortgage lenders, including Nationwide, HSBC UK, NatWest, Lloyds, Santander UK, and Barclays to talk about how the rising interest rates have affected their customers. Also in attendance were Richard Lloyd, the interim chair of the Financial Conduct Authority (FCA) who regulates and supervises mortgage lending, and consumer champion, Martin Lewis, who has been warning that the increase in energy prices, inflation, and interest rates could create a disastrous scenario for homeowners come springtime.
At the meeting, the chancellor advocated for the banks to show support to borrowers in any way they possibly can, such as allowing interest-only payments to help homeowners temporarily reduce their monthly expenses while many are still trying to recover from the economic hits they took during the pandemic.
After the mini-budget announcement in September, financial markets went haywire and borrowing costs increased, with homeowners on a variable rate mortgage and those in the midst of remortgaging bearing the brunt of the increased mortgage costs as a result.
Since then, despite rates cooling off a bit, average 5-year fixed deals are still sitting at about 5%. This, coupled with soaring energy and food bills and sky-high inflation means homeowners are really feeling the financial pressure.
As it turns out, many lenders have been proactively contacting customers they feel might be at risk of falling behind on payments. But since there is no guidance or oversight from regulators, they are unsure exactly how much and what kind of help they can provide these customers. At the height of the pandemic, the FCA urged lenders to be lenient by providing opportunities for interest-only payments as well as payment holidays. However, precisely what they should do during the current crisis has not been decided or communicated.
We will soon learn what plans they decided on and what will be implemented moving forward. If you have any questions or concerns about what this might mean for you, get in contact with one of our expert advisers today.