LONDON (AFP) – Britain on Friday unveiled help for millions of cash-strapped homeowners facing soaring mortgage costs in a cost-of-living crisis, after the Bank of England unexpectedly hiked interest rates to a new 15-year peak.
Finance Minister Jeremy Hunt said he had agreed a “mortgage charter” with top United Kingdom (UK) lenders for struggling customers, including those in arrears.
But he stopped short of offering direct support, angering political opponents.
The measures, announced follow a meeting with bank chiefs and the Financial Conduct Authority (FCA) watchdog, include mortgage holidays to give payment flexibility and a 12-month minimum period before repossessing homes.
Borrowers will also be able to extend the term of mortgages – or switch to an interest-only plan that does not repay capital on a temporary basis – before reverting to their original loan contract within six months, with no impact on their credit score.
Hunt said the Treasury was “particularly worried” about people “at real risk” of losing their homes because they fall behind in their mortgage repayments.
Those who have to change their mortgage because their fixed rate is coming to an end – and whose outgoings will go up – are also causing concern, he added.
“These measures should offer comfort to those who are anxious about high interest rates and support for those who do get into difficulty,” said Hunt.
The Bank of England (BoE) on Thursday lifted its key rate by a half-point to five per cent in the 13th increase in a row, driving up the cost of home loans from commercial lenders and pressuring Britons already buckling under surging food and fuel prices.
