Help When You Need It – Your Mortgage
Posted on 6th July 2023 at 16:39
Are You Worried About Your Mortgage Payments?
The Bank of England have raised the base rate at each of the past 12 monetary meetings and plenty has been written about the spiraling cost of people's mortgages but if you are one of those affected and are concerned about what to do then help is available.
The chancellor, Jeremy Hunt recently met with the UK’s principle mortgage lenders and the Financial Conduct Authority (FCA). At the meeting the lenders, who cover 75% of the market, agreed to a new charter providing support for residential mortgage customers. This support includes –
+ Anyone worried about their mortgage repayments can call their lender for information and support, without any impact on their credit score and I would encourage you to contact your lender who are 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 right up 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 ahead 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.
It is easy to become consumed with the doom and gloom being painted by mainstream news and media however it should be noted that the latest market indicators from the FCA and UK Finance show that mortgage arrears and debts remain below pre pandemic levels which were themselves historically very low. Currently 0.86% of mortgages are in arrears compared to 3.32% in 2009 (the last property market crash). What’s more the average loan to value (amount borrowed against value of the property) of people remortgaging in the past 12 months has been around 50% suggesting there is far more equity in our homes and makes it easier to manage repayments. Less than 10% of owner-occupier mortgages have a loan to value in excess of 75% compared to just over 25% prior to the last financial crash which again puts the market in a far stronger position than before.
Encouraging news lately is the further fall in the rate of inflation (greater than expected) and the drop in swap rates (the long term rates lenders use to determine their mortgage deals). It may well be that mortgage rates are reaching their peak and with competition from lenders to attract customers we may see rates easing in the months ahead. I would always suggest speaking with a qualified financial advisor to discuss your options and remember if you are worried about your existing payments then speak to your lender immediately.
Tagged as: Mortgage Advice
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