New data from the FCA indicates that around 1.1 million mortgages have benefited from one or more options set out in the Government’s Mortgage Charter, either explicitly or through standard business practices.
Approximately 113,000 mortgages have temporarily reduced monthly payments under the new FCA rules.
Between July 2023 and April 2024, around 159,000 mortgages had reduced monthly payments as borrowers switched to temporarily paying interest-only or extended their mortgage term.
This accounts for about 1.8% of regulated mortgage contracts. The data reveals that only 263 term extensions were reversed, suggesting that borrowers seeking temporary payment reductions prefer opting for an interest-only period.
The data also shows that 91 properties were repossessed within 12 months of missing the first payment, with firms reporting these as customer-driven cases, such as voluntary possessions or abandoned properties.
Introduced in June 2023, the Mortgage Charter includes commitments from 49 signatories, representing around 90% of the mortgage market.
These commitments include not forcing a borrower to leave their home without their consent, except in exceptional circumstances, within a year of their first missed payment.
The Charter allows customers to lock in a new deal up to six months ahead of the end of a fixed rate deal, and to request a better like-for-like deal up until the new one starts if available.
It also permits customers who are up to date with their payments to switch to interest-only payments for six months or extend their mortgage term without assessing affordability, with the option to revert to the original term within six months.
