New Mortgage Charter Announced By Gov to Help Struggling Borrowers

The squeeze on UK mortgage-holders has tightened, with the average cost of two and five-year fixed mortages hitting the highest since last November.

Financial data provider Moneyfacts reports that the average 2-year fixed residential mortgage rate has risen to 6.23%, up from 6.19% on Friday. That’s the highest since 16 November, when the property market was reeling from the chaos after the mini-budget.

The average 5-year fixed residential mortgage rate has inched up to 5.86%, up from 5.83% on Friday, the highest since the end of November.

These higher rates follow the Bank of England’s increase in interest rates last Thursday, which lifted Bank Rate to a 15-year high of 5%.

Government Reaction
In light of the current pressures on households, the Chancellor met with the UK’s largest mortgage lenders, UK Finance and the FCA on Friday (23 June). At this meeting, lenders agreed to new commitments to support borrowers as they go through this difficult period.

All lenders have agreed:

  • Anyone worried about their mortgage repayments can contact their lender for help and guidance, without 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 existing fixed rate deal without another affordability check.
  • Lenders will provide well-timed information to help customers plan ahead should their current rate be due to end.
  • Lenders will 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.

Signatories to this Charter have also agreed:

  • From 26th June, a borrower will not be forced to leave their home without their consent unless in exceptional circumstances, in less than a year from their first missed payment.
  • With effect from 10th July customers approaching the end of a fixed rate deal will have the chance to lock in a deal up to six months ahead. They will also be able to manage their new deal and request a better like for like deal with their lender right up until their new term starts, if one is available.

    A new deal between lenders, the FCA and the government permitting customers who are up to date with their payments to:
  • Switch to interest-only payments for six months or
  • extend their mortgage term to reduce their monthly payments and give customers the option to revert to their original term within 6 months by contacting their lender

More clients enquiring about income protection Insurance
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Rental increases outpace earnings for 21 months in a row
In April 2023, the average cost of a new let rose to £1,126 per month, following 21 consecutive months in which rental rises outstripped wage rises.

The average UK rent has now increased by £110-a-month – or 10.4% – since April 2022, marking the 15th consecutive month that we’ve seen double digit growth in rental inflation.

This level of rental inflation is high by historical standards and ahead of average earnings growth, which is currently at 6.5%. The gap between these measures highlights the impact on rental affordability, which is now at a record high in seven out of 12 UK regions.

The good news for many renters is that the rate of rental inflation is slowing down in inner London. The monthly rent for a new let in inner London is only £26 higher today than it was in January 2023.

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