MortgagesDec 8 2022

Hunt meets FCA and bank bosses to push mortgage flexibility

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Hunt meets FCA and bank bosses to push mortgage flexibility
REUTERS/Toby Melville/File Photo

  • Enabling them to switch to a new fixed rate mortgage, without a new affordability test, when their current deal ends if consumers are up-to-date with their payments, a category which accounts for some 97 per cent of the market;
  • Providing them with well-timed information ahead of any change to rates;
  • Offering specific help to those who start to struggle with payments, for example by extending the term of the mortgage to make monthly payments lower, a short term reduction in monthly payments or accepting interest-only payments for a period; and
  • Ensuring highly trained and experienced staff are on hand to help.

The government also confirmed action to make Support for Mortgage Interest, which helps homeowners on certain benefits pay interest on loans or mortgages, easier to access.

If borrowers are on universal credit, they could also be eligible to receive help with their mortgage interest payments after three months.

Hunt also said his government was providing “record levels” of funding for the Money and Pensions Service to provide debt advice in England.

Rates falling

Mortgage lenders have gradually been reducing interest rates over the past month following former prime minister Liz Truss’ "mini" Budget which sent swap rates, and in turn interest rates, soaring.

Average interest rates on two-year fixed rate mortgages peaked at around 6.5 per cent in October, according to Moneyfacts.

But now, with swap rates stabilising, a handful of lenders have launched sub-5 per cent deals.

Chief executive of Nationwide Building Society, Debbie Crosbie, said the mutual had reduced rates for those reaching the end of their deals so they can access a fixed rate below 5 per cent, regardless of loan-to-value or tenure.

“For additional support, our options include term extensions and forbearance tailored to individual circumstances,” she said.