Jeremy Hunt claims the ‘government will do what it takes’ to tackle inflation
Mortgage-holders will be offered a series of steps to help them deal with the hike in interest rates that leaves some facing extra payments of thousands of pounds a month, the chancellor has announced.
After a key meeting with lenders, Jeremy Hunt unveiled new measures including the ability to talk to their bank or building society without it affecting their credit score.
Mr Hunt, who resisted offering borrowers government support, said banks and building societies had agreed to implement a 12-month minimum term before repossessing homes.
And he said the lenders would allow struggling borrowers to extend the term of their mortgages or move to an interest-only plan temporarily, “no questions asked”.
The chancellor met the bosses of HSBC, Santander and Barclays among others, after a 0.5 percentage-point base-rate hike threatened further pain for struggling households.
He stressed that tackling stubbornly high inflation, which is behind the Bank of England’s repeated rate rises, is the “number one priority”.
Earlier, Downing Street doubled down on its pledge not to directly intervene to help mortgage holders struggling with spiralling costs.
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What new mortgage measures mean for borrowers
Jeremy Hunt and major banks agreed measures to help ease the pain of rising rates. Vicky Shaw looks at what this means for people who are struggling with their mortgage payments:
Jane Dalton23 June 2023 17:50
Measures positive but won’t cure all worries, say experts
Personal finance experts have given a cautious welcome to Jeremy Hunt’s deal with lenders to ease the situation for struggling homeowners.
But one finance expert said it would be “unlikely to stem the tidal wave of worry” that homeowners are facing:
Jane Dalton24 June 2023 06:00
Bank pledges to raise rates for savers
HSBC UK said it planned to boost rates on cash savings following the base rate rise.
A spokesman said: “Following a review, we will be increasing rates shortly and making other changes, and we will be in a position to share the specifics early next week.
“But we fully support the government calls for customers to contact their bank or building society at the earliest opportunity if they have money worries, as it will not affect their credit score.”
Jane Dalton24 June 2023 03:00
Give borrowers direct support, urges shadow chancellor
Shadow chancellor Rachel Reeves slammed the government for not giving direct financial support to mortgage-holders.
“The government’s failure today to make its measures on mortgages mandatory means around 2 million households will miss out on the mortgage support they need,” she tweeted.
“The government’s chaotic approach this week gives little confidence that they’ve got a grip on what families face. They should take responsibility, and adopt Labour’s plan to ease the Tory mortgage crisis.”
Jane Dalton23 June 2023 23:55
In full: The measures lenders have agreed
The full measures agreed by lenders are:
Jane Dalton23 June 2023 20:54
The choices facing desperate homeowners
ICYMI: Many households across the UK are sitting on a mortgage ticking time bomb:
Jane Dalton23 June 2023 18:35
The mortgage crisis in figures
Financial markets are predicting that interest rates will hit a high of 6% by the end of the year.
There have been warnings that 1.4 million mortgage holders will lose at least a fifth of their disposable income in additional repayments.
They are set to rise by £2,900 for the average household remortgaging next year, according to economists at the Resolution Foundation.
More than 80 per cent of homeowners with a mortgage are on fixed-rate deals, according to trade association UK Finance.
However, around 2.4 million fixed-rate mortgage deals are due to end before the end of next year, with some potentially heading for a bill shock.
Jane Dalton23 June 2023 17:05
Martin Lewis blasts banks for ‘outrageous’ delay in better saving rates
Consumer campaigner Martin Lewis says it seems “absolutely outrageous” that rates for savers are lagging behind rates for mortgage borrowers:
Jane Dalton23 June 2023 16:30
‘Sticking plaster for gushing wound’
Liberal Democrat Treasury spokeswoman Sarah Olney branded Jeremy Hunt’s deal with lenders as “a sticking plaster for a gushing wound”.
“Even after today, bailiffs will still be knocking on people’s doors because the Government refused to help,” she said.
The SNP’s Social Justice spokesperson David Linden welcomed action on repossessions but described the measures as “paper thin”.
Jane Dalton23 June 2023 15:59
Tories must take responsiblity for crisis they created, say Labour
Shadow chancellor Rachel Reeves slated the “weak” response from the government on “a mortgage crisis they created”.
It shows just how little they understand what families are facing, she claimed.
“Questions remain on how voluntary these measures are. The government must offer clarity and confidence to homeowners by putting in place requirements now to reassure households.
“Instead of shrugging their shoulders, the Tories should be taking responsibility and acting now.”
Jane Dalton23 June 2023 15:34