Treasury has published a policy paper on the Mortgage Charter, which sets out commitments from the principal UK mortgage lenders to their residential mortgage borrowers. The new commitments are designed to help borrowers during the cost of living crisis. The lenders have agreed:
- anyone worried about their mortgage repayments can contact their lender for help and guidance without this having any impact on their credit file;
- support for customers who are up-to-date with payments to switch to a new mortgage deal at the end of their fixed period without undergoing another affordability check;
- to provide information at appropriate times to help customers whose current rates are due to end to plan ahead;
- to offer tailored support with appropriately trained staff for struggling customers. The support will consider a range of options, including extending the mortgage term to reduce payments, offering a switch to an interest only deal and temporary deferrals;
- not to force borrowers to leave their homes within a year from their first missed payment except in exceptional circumstances;
- to give customers a change to lock in a deal up to 6 months ahead when approaching the end of a fixed rate deal (from 10 July), and to request a better one from the lender if one becomes available before the new term starts; and
- to allow customers who are up to date with payments to switch to interest-only payments for 6 months or extend their term to reduce payments.
The lenders, UK Finance and FCA have all committed to implementing the Charter. FCA will implement necessary rules by 30 June and PRA has confirmed the new measures are not expected to lead to an increase in capital requirements for banks.