Government and Lenders Unite to Support UK Borrowers

Government and Leading Lenders Join Forces to Assist Borrowers Amid Cost-of-Living Crisis

Amidst growing concerns about the rising cost of living and the challenges of securing mortgages, the UK government, major mortgage providers, and the Financial Conduct Authority (FCA) have taken decisive steps to support borrowers. In a meeting held on 7th December, attended by financial expert Martin Lewis of Money Saving Expert, these entities unveiled commitments aimed at assisting individuals during these challenging times.

What Lenders Are Doing to Help

During the meeting, mortgage lenders pledged to provide borrowers with access to crucial information, advice, and support resources whenever they are needed. This includes offering timely information updates and ensuring the availability of experienced and trained staff to assist borrowers effectively.

Moreover, lenders have agreed to allow customers who are up-to-date with their mortgage payments to switch to a new deal without requiring an additional affordability assessment. This option is available provided that borrowers are not seeking to borrow additional funds or alter the terms of their existing mortgage agreement.

Lenders have also outlined tailored support options for borrowers facing financial difficulties, which may vary depending on the specific lender and individual circumstances. These options include:

• Extending the Payment Term: Lowering monthly payments by extending the repayment period.
• Short-Term Payment Reduction: Allowing for lower monthly payments temporarily.
• Interest-Only Payments: Accepting payments that cover only the interest portion of the mortgage.

It's essential to note that some of these support measures may impact a borrower's credit rating, depending on the nature of the assistance provided.

Commitments from the Financial Conduct Authority (FCA)

The FCA has pledged to create a comprehensive information package for borrowers outlining their options and opportunities to seek support in times of payment difficulties. This information will be made available on the FCA's website. Additionally, the FCA has announced plans to consult on guidelines that clarify how lenders can support borrowers in challenging financial situations.

Government Initiatives

The government has introduced two significant policies to provide further assistance:

1. Support for Mortgage Interest Payments: Individuals on Universal Credit who are struggling to meet their mortgage payments will become eligible for Support for Mortgage Interest payments after just three months, down from the previous nine-month waiting period.
2. Increased Funding for Debt Advice Services: The government has allocated record levels of funding to the Money and Pensions Service, which offers debt advice services to individuals facing financial difficulties.

Martin Lewis, a prominent financial expert, has welcomed these developments as a positive step forward. However, he also emphasized that the most significant concerns for many people may arise in the spring of 2023.

What to Do If You're Struggling with Your Mortgage

If you find yourself facing challenges with your mortgage repayments or anticipate difficulties in the near future, it is crucial to reach out to your lender as soon as possible. Lenders are committed to keeping borrowers in their homes and can tailor their support to your unique circumstances.

Even if the solution provided, such as a term extension or switching to an interest-only mortgage, may have a temporary impact on your credit score, it is far less detrimental than missing a payment or defaulting on your mortgage. Act proactively and seek assistance to navigate these challenging times successfully.