In an interview on the Sophy Ridge On Sunday show on Sky News, Lisa Nandy, Labour’s Shadow Secretary for Levelling Up Housing and Communities, expressed concerns about the recently announced support measures for mortgage holders.
Nandy emphasised the need for mandatory implementation to ensure that all mortgage payers have access to the measures, allowing them to extend mortgage terms and shift between different mortgage types for increased flexibility.
She also called for clarity on potential fees, tariffs, and the impact on credit ratings associated with changing mortgage terms.
Nandy said: “We estimate that significant numbers of people won’t be able to access any support at all unless the measures become mandatory so that all mortgage payers, not just some, have access to these measures that give them more flexibility to extend mortgage terms, to be able to shift from one type of mortgage to another.”
Highlighting the importance of transparency, Nandy continued: “We want clarity about whether there will be any fees or tariffs attached to changing the terms of your mortgage.
“We want to ensure it won’t affect people’s credit ratings if they take up these offers. These are all questions that the Chancellor has to be able to answer if people are to be confident that there is help coming now and that they will be able to stay in their homes.”
Addressing affordability Nandy stressed: “More importantly, for far too long, even before the Tory Government crashed the economy and sent mortgages through the roof, we’ve had an affordability crisis in this country.
“The reason that people are feeling a lot more pain now than they were in the 90s is that the average buyer in the 90s was borrowing three or four times their annual salary. Now they are borrowing around 11 times their annual salary.
“There is no answer to this crisis without building more homes, and that is exactly what Labour will do.”
On Friday the Government announced a new mortgage charter developed in collaboration with lenders, the Financial Conduct Authority (FCA), and Chancellor of the Exchequer, Jeremy Hunt.
The charter aims to support residential mortgage customers and address worries about mortgage repayments and flexibility in managing mortgages.
Chancellor Jeremy Hunt explained: “There are two groups of people that we are particularly worried about. The first are people who are at real risk of losing their homes because they fall behind in their mortgage payments.
“And the second are people who are having to change their mortgage because their fixed rate comes to an end, and they’re worried about the impact on their family finances of higher mortgage rates.”
Hunt outlined three important aspects of the mortgage charter: “The first is that absolutely anyone can talk to their bank or their 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. And finally, for people who are at risk of losing their home in that extreme situation, the banks and mortgage lenders have a number of things in place.
“The last thing that they want to do is to repossess a home, but in that extreme situation, they have agreed there will be a minimum 12-month period before there’s a repossession without consent.”
The mortgage charter includes provisions such as allowing anyone worried about their mortgage repayments to contact their lender for information and support without impacting their credit score. It also ensures that customers won’t face immediate home repossession within 12 months from their first missed payment.
Customers approaching the end of a fixed-rate deal will be offered the opportunity to lock in a new deal up to six months in advance, with the flexibility to apply for a better deal until their new term starts, if available.
The charter also permits customers to switch to an interest-only mortgage for six months or extend their mortgage term to reduce monthly payments.
They can then switch back to their original term within the first six months, without the need for a new affordability check or affecting their credit score.
For customers who are up-to-date with payments, they will be able to switch to a new mortgage deal at the end of their existing fixed-rate term without undergoing another affordability check.
The mortgage charter also calls for the providing well-timed information to help customers plan ahead for the end of their current rate.
Additionally, it offers tailored support options for individuals struggling with their mortgage repayments, such as extending their term, offering interest-only payments, and other flexible arrangements based on individual circumstances.
The Government’s mortgage charter was developed in collaboration with the major lenders covering over 75% of the market. Trade bodies such as IMLA and the FLA have all been calling on borrowers to open communication with lenders should they face issues since last year’s disastrous mini-Budget.
The Chancellor also confirmed the Government’s commitment to tackling high inflation and supporting the Bank of England’s efforts. He said: “Tackling high inflation is the Prime Minister and my number one priority.
“We are absolutely committed to supporting the Bank of England to do what it takes. We know the pressure that families are feeling.”
