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Chancellor agrees on new support measures for mortgage holders.
On 23 June, Chancellor Jeremy Hunt met the UK’s principal mortgage lenders and the Financial Conduct Authority (FCA) to agree on support for people struggling with mortgage repayments.
As a professional and responsible mortgage broker firm, we wanted to share the information and commentary on what we believe should be welcome news for homes concerned about increasing mortgage payments. Or have concerns about losing their home,
The latest market indicators (FCA; UK Finance) show that mortgage arrears and defaults remain below pre-pandemic levels, which were extremely low. The FCA reported 0.86% of total residential mortgage balances in arrears in the first quarter of 2023, significantly lower than the 3.32% rate in 2009.
The proportion of disposable income spent on mortgage payments is currently at 5.4%, compared to around 10% in the 1990s and before the financial crisis.
Over the last twelve months, the average homeowner re-mortgaging had around a 50% loan-to-value ratio. This indicates homeowners have considerable equity in their homes, which makes it easier to manage repayments. Lenders have less than 10% ‘owner-occupier mortgages’ on their books with loan-to-value rates greater than 75%, compared to around 25% before the 2008 financial crisis. This puts the market in a significantly stronger position than before.
The lenders – which cover over 75% of the market – agreed to a new mortgage charter providing support to residential mortgage customers. These are:
The Chancellor of the Exchequer, Jeremy Hunt, said:
There are two groups of people that we are apprehensive about. The first are people who risk losing their homes because they fall behind in their mortgage payments. And the second is people who have to change their Mortgage because their fixed rate ends, and they’re worried about the impact on their family finances of higher mortgage rates.
So today, I agreed with the three essential things: the banks, principal mortgage lenders, and the Financial Conduct Authority.
The first is that anyone can talk to their bank or mortgage lender, and it will have no impact whatsoever on their credit score.
The second is that if you are anxious about the impact on your family finances and you change your Mortgage to interest only, or you extend the term of your Mortgage, and you want to go back to your original mortgage deal, within six months, you can do so, no questions asked and no impact on your credit score. That gives people a powerful new tool for managing their monthly budgets – and it will begin taking effect within the next two weeks.
These measures should offer comfort to those anxious about high-interest rates and support for those who do get into difficulty.
Tackling high inflation is the Prime Minister and my number one priority. We are committed to supporting the Bank of England to do what it takes. We know the pressure that families are feeling. That’s why we’ve introduced oversized support packages of around £3,000 for the average household this year and last.
But we will do what it takes, and we won’t flinch in our resolve because we know that getting rid of high inflation from our economy is the only way we can ultimately relieve pressure on family finances and businesses.”
Independent Mortgage Advice
MMPE can offer Independent Mortgage advice and can provide support and advice. If you are concerned about increasing rates and costs, use the contact form below to reach out. MMPE has years of industry experience to assist with strategic guidance to best navigate the challenges. MMPE can provide:
In these uncertain times, having a trusted partner by your side can make a significant difference. As a business, we are committed to guiding our clients through what is proving to be a challenging situation.
If you have concerns about any of the following situations, we can help.
If any of the points above cause you any concern and you would like assistance, please complete our simple form in the additional information box to confirm your lender and product end date, i.e. when your deal finishes and your concerns.
Handy Hints and Tips
Get prepared; suppose you have a mortgage product end date coming out within the next 6 to 8 months. Prepare yourself, and make sure you have up-to-date payslips, bank statements, and proof of address.
If self-employed, make sure your tax calculations and overviews are correctly filed and available.
Know your up-to-date balances on financial commitments such as loans, credit cards or HP.
Check your credit profile and correct any errors.
Stay away from payday loans and online gambling sites. This type of transaction can impact a lender’s decision to lend.
Review both your existing lender and open market options, do not just accept your lender’s product transfer options; there could be better options for you; use the services of a broker to investigate your options. The open market could provide you with lower rates, which could provide valuable savings.
MMPE provide a rate review service up until completion, meaning that if a new mortgage rate is secured, then a better deal becomes available, and we will work with you to move to the better rate.
If necessary, you could review extending your mortgage term will assist with lowering monthly costs if mortgage payments are unaffordable.
As an independent broker, we will assist with reviewing the open market and existing lender product transfer options. It is essential to review all possible options, as there could be much-needed savings to be made by switching lenders.
Equally, some lenders delay the opportunity to switch at the six months stage and may not provide product transfer deals until close to the product end date, by which time rates could have increased further. With market conditions as they are, we highly recommend reviewing early and then locking in a new rate and deal. We are offering all clients an ongoing review service. Meaning that if rates do drop after locking in a mortgage, we will work with you to switch the deal to the cheaper option. In some households, the new mortgage payment has increased, making the payments unaffordable or a real stretch. MMPE will work with you to review your options.
With market conditions as they are, independent advice could prove invaluable. Contact us today to find out more!Contact Us
My Mortgage Experts & Protection Experts Ltd (FCA 937076), is an Appointed Representative of King Mortgages Ltd.
King Mortgages is authorised & regulated by the Financial Conduct Authority (FCA). King Mortgages Ltd is entered on the financial services register http://register.fca.org.uk/ under reference number 803561.
The information contained within this website is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK.
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Changes in property value, coupled with a potential reduction in your loan amount (with a repayment mortgage), mean a change in the equity available in your property (Loan to Value); hence there could be improved opportunities for a better mortgage for you.
Sussed will track when your mortgage is due to expire (usually when your mortgage payments rise substantially as you will automatically transfer to your lender’s standard rate).
The app will alert you when it’s the right time to discuss your options with your mortgage broker.
Sussed can help you plan.
This feature is ideal for today’s economy and increasing prices. Sussed will continually scan the market, looking for the best-fixed rates available, especially when interest rates are rising.
Using a series of algorithms, our clever technology can identify longer-term fixed rates available today that could save money against predicted rates at the end of your current product term (including the cost of transfer) – sussed is doing all the hard work.
With automatic property value updates and your Mortgage information loaded, this feature calculates the amount of equity and the maximum potential loan that may be available within a landlord’s portfolio. This will assist with seeing if there is the opportunity for to perhaps buy another property from leveraging your portfolio.
Within sussed, you will also be able to see each of your properties with a roadside picture, a confirmed property value, monthly rental, current mortgage balance, payments, interest rate and the Loan to value/Gross rental yield.
Sussed can help you manage your portfolio.
This feature is there waiting for interest rates when they reduce. Using the same technology as Rate Riser, sussed will identify if your current deal is now able to be improved.
Should the interest rates decrease, sussed will compare deals available on the day with your existing deal and flag if there is an opportunity for you to save money by switching.
There are price limits on homes you can buy with an equity loan. The limit is different for each region in England.