Concerned about your Mortgage or losing your home?

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:

• Anyone worried about their mortgage repayments can call their lender for information and support without any impact on their credit score, and we encourage you to contact your bank, who is there to help.
• Customers won’t be forced to have their homes repossessed within 12 months from their first missed payment.
• Customers approaching the end of a fixed-rate deal will be offered the chance to lock in a deal up to six months ahead. They will also be able to apply for a better deal until their new term starts if one is available.
• A new agreement between lenders, the FCA, and the government permitting customers to switch to an interest-only mortgage for six months or extend their mortgage term to reduce their monthly payments and switch back to their original term within the first six months if they choose to. Both options can be taken without a new affordability check or affecting their credit score.
• Support for customers who are up-to-date with payments to switch to a new mortgage deal at the end of their existing fixed rate deal without another affordability check.
• Providing well-timed information to help customers plan should their current rate be due to end.
• Offer tailored support for anyone struggling and deploy highly trained staff to help customers. This could mean extending their term to reduce their payments, offering a switch to interest-only payments, but also a range of other options like a temporary payment deferral or part interest-part repayment. The right option will depend on the customer’s circumstances.

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:

• Expertise & knowledge: MMPE is a team of experienced mortgage professionals who have experienced the peaks and troughs of the mortgage market. We keep up to date with market trends, commentary, regulations, and economic indicators to assist with providing informed advice and guidance.
• Personal recommendations: we understand that each household situation is unique. We take account of your personal situation, budget, and future plans to ensure that you are provided with suitable recommendations to enable you to make well-informed decisions.
• The whole of market & is independent; we have established strong relationships with many lenders. With a challenging mortgage market, the high street lenders will tighten criteria and bolt down the hatches, so they will not always be available. Smaller, less well-known lenders may often provide a unique solution.
• Straightforward process: we understand that the mortgage market can be complex. Our aim is to simplify the entire process, to alleviate any stress and confusion. With online systems and dedicated support, we aim to make the mortgage journey as smooth and straightforward as possible.

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.

• You have an existing mortgage and are concerned about future cost increases.
• You have a tracker or discounted Mortgage, is now the time to fix it?
• You have a mortgage deal ending in the next 6 to 12 months.
• You have not used this before and would benefit from a strategic mortgage partner to assist.
• You feel trapped with your existing lender on a variable or tracker rate deal.
• You have gone self-employed and have concerns about your ability to get a new mortgage.

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.

• If your last Mortgage was arranged by MMPE, then we will have all the necessary information and will contact you at the appropriate time.
• If you did not arrange your last Mortgage with us and would like assistance, please register your interest using our simple 3-step form. In the additional information section, confirm your lender, the product end date, and any concerns. We can then contact you at the appropriate time.
• If you haven’t arranged your Mortgage yet and would like to know how we can help, click here.
• If you are concerned and want to discuss market conditions and options, please email mymortgage@mmpe.co.uk we will be pleased to assist.

With market conditions as they are, independent advice could prove invaluable. Contact us today to find out more!

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