The charter was published yesterday, after the Chancellor’s meeting with lenders on Friday to discuss the effect of increasing mortgage rates on homeowners
Nearly 85 per cent of lenders operating in the UK’s mortgage market have signed a government charter assenting to assist borrowers.
The charter was published yesterday, after the Chancellor’s meeting with lenders on Friday to discuss the effect of increasing mortgage rates on homeowners.
The agreements include permitting borrowers to approach their lender for assistance without affecting their credit file and letting borrowers who are up to date with payments to move to a new mortgage when their fixed term finishes without another affordability check. The ability to shift without an affordability check will be effective 10 July and will be available six months before a borrower’s fixed term period completes. They can also request a better like for like deal before their term finishes in case one becomes available.
Lenders have also consented to time information so borrowers can plan ahead before their rate ends, and provide assistance to those struggling financially. This may include stretching their mortgage term to lessen payments, shifting to an interest-only payment arrangement, or temporarily shelve payments.
From today, lenders have assured that borrowers will not be removed from their homes without their consent in less than a year from their first missed payment. This does not include “exceptional circumstances”.
Changes will be made to the FCA’s rulebook to mirror this, and an update on the headway made will be announced by 30 June.
David Postings, Chief Executive Officer of UK Finance, stated that lenders acknowledge and realise this is an uneasy time for mortgage customers and there is plenty of assistance available. Lenders have been contacting and assisting millions of customers and are working with the government and regulators to continue to provide an array of help options for customers. Anyone who is concerned about their finances should reach out to their lender to find out what choices are available to help. Approaching your lender to speak about the choices available will not affect your credit score.
Nikhil Rathi, chief executive of the FCA, said: This charter continues on the work we and lenders have done over recent years to make sure those who get into hardship get the aid they require. The additional commitments from signatories provide customers with clarity and reliability on how they can expect to be treated.
He said: Mortgages continue to be a priority for the FCA, and we will continue to work closely with lenders to make sure borrowers are helped, as part of our work on consumers who might face financial struggles.