1 reactions
#News
Subscribe me for daily News Updates
Mortgages: Banks offer more flexibility to struggling borrowers
Published
24 minutes ago
comments
Comments
Share
IMAGE SOURCE,
GETTY IMAGES
B y Kevin Peachey & Jemma Dempsey
BBC News
B anks and building societies will offer more flexibility to struggling mortgage-holders as rates soar.
The move comes after bank bosses met the chancellor, Jeremy Hunt, in Downing Street on Friday.
Borrowers will be able to make a temporary change to their mortgage terms, then will be able to return to their original deal within six months.
This would allow some to have lower repayments for a short time, by just paying the interest on the home loan.
Mr Hunt said the temporary flexibility on switching terms would not affect credit scores.
However, it will still be the case that missing payments or taking a total break on payments, known as a mortgage holiday, will still harm someone's ability to borrow in the future.
Lenders also agreed to a 12-month delay before taking repossession proceedings against borrowers unable, or unwilling, to pay over the long term.
Bank chief executives described it as a "productive" meeting as they left Downing Street.
Earlier this week, the Labour Party issued a five point plan which it said would ease what it called "the Tory mortgage penalty" and help limit repossessions.
Labour said the typical British household was paying £1,000 more in mortgage payments than neighbours in Germany, France, the Netherlands and Ireland.
Five ways to save money on your mortgage
How the interest rate rise affects you
The meeting between lenders and Mr Hunt comes after Thursday's shock decision by the Bank of England to raise interest rates to 5%, up from 4.5%, as it tries to tackle inflation.
Millions of UK households will see their budgets squeezed as a result.
Some, including the National Residential Landlords Association (NRLA), are calling for government action, such as the reintroduction of mortgage interest relief and the unfreezing of housing benefit rates .
The NRLA warned that interest rates of 5% could force landlords to sell 735,000 rental properties which it said would "exacerbate the ongoing supply and demand crisis across the private rented sector".
But Mr Hunt and Prime Minister Rishi Sunak have dismissed suggestions that the government should step in, arguing providing support for borrowers could undermine the Bank of England's battle against inflation. Figures released on Wednesday showed remained stuck at 8.7% in May.
After the interest rate rise was announced, Mr Sunak said the government would remain "steadfast and stick to its plan" to bring down inflation.
How much could my mortgage go up by?
How much are you borrowing?
£
How long will you take to pay it back?
years
What is your current...
interest rate
monthly payment
interest rate
%
Choose an interest rate to compare with…
%
This calculator does not constitute financial advice. It is based on a standard mortgage repayment formula based on the mortgage size and length and a fixed interest rate. It should be used as a guide only and does not represent the suitability, eligibility or availability of mortgage offers for users. For exact figures, users will need to approach an official mortgage lender.
Interest rates fluctuate based on the Bank of England's base rate and market conditions.
If you can't see the calculator, click here.
Tim Pitt, a partner at the consulting firm Flint Global and a former Treasury adviser, said the chancellor should "hold his nerve".
"He needs to not make the Bank's job harder," he told the BBC's Today programme.
Interest rate rises are partly aimed at dampening spending in the economy, by reducing people's disposable income. So providing general support for mortgage-holders would work counter to the Bank of England's policy.
Bank of England governor Andrew Bailey admitted on Thursday that the 13th consecutive rise in rates since December 2021 would cause "difficulty and pain" for many. Those with loans would be "understandably worried" he said.
Mortgage rates have been rising for months. An average two-year fixed rate mortgage is currently at 6.19%, while the five-year rate is 5.82%, according to financial data firm Moneyfacts.
The average two-year tracker mortgage rate rose to 5.66%, from 5.49% following Thursday's rate rise.
In June last year those rates were closer to 3%.
The latest move by the Bank of England has yet to filter through into current mortgage rates, according to David Hollingworth from London and Country brokers.
"Fixed rates have not gone into overdrive, they're still moving rapidly but there's no acceleration. We'll see how the markets react in the coming days," he said.
Rising interest rates can also reduce spending in the economy by boosting the incentive to save money.
The BBC understands some savings rates have already been put up following Thursday's rate rise. But in recent weeks, MPs have criticised banks for failing to pass rate rises on in full to savers with easy-access accounts.
Harriet Baldwin, chair of the Treasury Committee, told the Today programme that High Street banks had been "incredibly slow" in passing on rate rises.
She said that banks had "taken it for granted that we've got used to not earning anything on savings", adding that savers were "basically being taken advantage of at the moment".
How will the latest interest rate rise affect you? You can share your experiences by emailing [email protected] .
Please include a contact number if you are willing to speak to a BBC journalist. You can also get in touch in the following ways:
WhatsApp: +44 7756 165803
Tweet: @BBC_HaveYourSay
Upload pictures or video
Please read our terms & conditions and privacy policy
0/500
Your contact info
I accept the Terms of Service
Submit
In some cases a selection of your comments and questions will be published, displaying your name and location as you provide it unless you state otherwise. Your contact details will never be published.
At no time should you endanger yourself or others, take any unnecessary risks or infringe any laws.
The BBC retains the right to select from these contributions based on editorial requirements and subject to online terms and conditions and BBC editorial guidelines . For more information about how the BBC handles your personal data, see here .
Made with Hearken | Terms of Service | Privacy Policy
If you are reading this page and can't see the form you will need to visit the mobile version of the BBC website to submit your question or comment or you can email us at [email protected] . Please include your name, age and location with any submission.
Sign up for our UK morning newsletter and get BBC News in your inbox.
Related Topics
Inflation
Bank of England
Mortgages
More on this story
Five ways to save money on your mortgage
Published
2 hours ago
Force banks to offer mortgage help, says Labour
Published
1 day ago
Bank boss denies wanting slump after 5% rate shock
Published
18 hours ago
'My savings are fast becoming worthless'
Published
4 hours ago
How the interest rate rise affects you
Published
23 hours ago
View comments
Top Stories
LIVE
.
Tributes paid to Titan passengers as safety questions grow
James Cameron: Titan sub company cut corners
Published
1 hour ago
How Modi and Biden turbocharged India-US ties
Published
5 hours ago
Features
James Cameron: Titan sub company cut corners
What happens next in Titanic sub operation
' It's a catastrophe. Everything was washed away'
Ca rly Rae Jepsen on Glastonbury: I'll get lost like a child
Wee kly quiz: How do Zuck and Musk plan to face off?
Why Kenya struck a big deal with the EU on its own
Stude nts switch to AI to learn languages
Why is it so rare to hear of Western cyber-attacks?
Europe' s most expensive painting ever?
Elsewher e on the BBC
How MDMA changed a US white supremacist
The film Churchill tried to ban
How one te mple feeds 100,000 people a day
Most Read
1
James Camer on: Titan sub company cut corners
2
Musk and Zu ckerberg agree to hold cage fight
3
Russian dip lomat squatting is no threat - Australia
4
Titan sub i mplosion: How did it happen?
5
Parts of mi ssing sub's cover found, expert says
6
What will T itan investigators be looking for?
7
'It's a cat astrophe. Everything was washed away'
8
Steps refus e Dubai gig over sexuality clause
9
How Modi an d Biden turbocharged India-US ties
10
Tributes pa id to Titan sub 'true explorers'
BBC News Se rvices
On your mob ile
On smart sp eakers
Get news al erts
Contact BBC News
Home
News
Sport
Reel
Worklife
Travel
Future
Culture
Music
TV
Weather
Sounds
Terms of Us e
About the B BC
Privacy Pol icy
Cookies
Accessibili ty Help
Parental Gu idance
Contact the BBC
Get Persona lised Newsletters
Why you can trust the BBC
Advertise w ith us
Do not shar e or sell my info
© 2023 BBC. The BBC is not responsible for the content of external sites.
Read about our approach to external linking.
Subscribe me for daily News Updates
Mortgages: Banks offer more flexibility to struggling borrowers
Published
24 minutes ago
comments
Comments
Share
IMAGE SOURCE,
GETTY IMAGES
B y Kevin Peachey & Jemma Dempsey
BBC News
B anks and building societies will offer more flexibility to struggling mortgage-holders as rates soar.
The move comes after bank bosses met the chancellor, Jeremy Hunt, in Downing Street on Friday.
Borrowers will be able to make a temporary change to their mortgage terms, then will be able to return to their original deal within six months.
This would allow some to have lower repayments for a short time, by just paying the interest on the home loan.
Mr Hunt said the temporary flexibility on switching terms would not affect credit scores.
However, it will still be the case that missing payments or taking a total break on payments, known as a mortgage holiday, will still harm someone's ability to borrow in the future.
Lenders also agreed to a 12-month delay before taking repossession proceedings against borrowers unable, or unwilling, to pay over the long term.
Bank chief executives described it as a "productive" meeting as they left Downing Street.
Earlier this week, the Labour Party issued a five point plan which it said would ease what it called "the Tory mortgage penalty" and help limit repossessions.
Labour said the typical British household was paying £1,000 more in mortgage payments than neighbours in Germany, France, the Netherlands and Ireland.
Five ways to save money on your mortgage
How the interest rate rise affects you
The meeting between lenders and Mr Hunt comes after Thursday's shock decision by the Bank of England to raise interest rates to 5%, up from 4.5%, as it tries to tackle inflation.
Millions of UK households will see their budgets squeezed as a result.
Some, including the National Residential Landlords Association (NRLA), are calling for government action, such as the reintroduction of mortgage interest relief and the unfreezing of housing benefit rates .
The NRLA warned that interest rates of 5% could force landlords to sell 735,000 rental properties which it said would "exacerbate the ongoing supply and demand crisis across the private rented sector".
But Mr Hunt and Prime Minister Rishi Sunak have dismissed suggestions that the government should step in, arguing providing support for borrowers could undermine the Bank of England's battle against inflation. Figures released on Wednesday showed remained stuck at 8.7% in May.
After the interest rate rise was announced, Mr Sunak said the government would remain "steadfast and stick to its plan" to bring down inflation.
How much could my mortgage go up by?
How much are you borrowing?
£
How long will you take to pay it back?
years
What is your current...
interest rate
monthly payment
interest rate
%
Choose an interest rate to compare with…
%
This calculator does not constitute financial advice. It is based on a standard mortgage repayment formula based on the mortgage size and length and a fixed interest rate. It should be used as a guide only and does not represent the suitability, eligibility or availability of mortgage offers for users. For exact figures, users will need to approach an official mortgage lender.
Interest rates fluctuate based on the Bank of England's base rate and market conditions.
If you can't see the calculator, click here.
Tim Pitt, a partner at the consulting firm Flint Global and a former Treasury adviser, said the chancellor should "hold his nerve".
"He needs to not make the Bank's job harder," he told the BBC's Today programme.
Interest rate rises are partly aimed at dampening spending in the economy, by reducing people's disposable income. So providing general support for mortgage-holders would work counter to the Bank of England's policy.
Bank of England governor Andrew Bailey admitted on Thursday that the 13th consecutive rise in rates since December 2021 would cause "difficulty and pain" for many. Those with loans would be "understandably worried" he said.
Mortgage rates have been rising for months. An average two-year fixed rate mortgage is currently at 6.19%, while the five-year rate is 5.82%, according to financial data firm Moneyfacts.
The average two-year tracker mortgage rate rose to 5.66%, from 5.49% following Thursday's rate rise.
In June last year those rates were closer to 3%.
The latest move by the Bank of England has yet to filter through into current mortgage rates, according to David Hollingworth from London and Country brokers.
"Fixed rates have not gone into overdrive, they're still moving rapidly but there's no acceleration. We'll see how the markets react in the coming days," he said.
Rising interest rates can also reduce spending in the economy by boosting the incentive to save money.
The BBC understands some savings rates have already been put up following Thursday's rate rise. But in recent weeks, MPs have criticised banks for failing to pass rate rises on in full to savers with easy-access accounts.
Harriet Baldwin, chair of the Treasury Committee, told the Today programme that High Street banks had been "incredibly slow" in passing on rate rises.
She said that banks had "taken it for granted that we've got used to not earning anything on savings", adding that savers were "basically being taken advantage of at the moment".
How will the latest interest rate rise affect you? You can share your experiences by emailing [email protected] .
Please include a contact number if you are willing to speak to a BBC journalist. You can also get in touch in the following ways:
WhatsApp: +44 7756 165803
Tweet: @BBC_HaveYourSay
Upload pictures or video
Please read our terms & conditions and privacy policy
0/500
Your contact info
I accept the Terms of Service
Submit
In some cases a selection of your comments and questions will be published, displaying your name and location as you provide it unless you state otherwise. Your contact details will never be published.
At no time should you endanger yourself or others, take any unnecessary risks or infringe any laws.
The BBC retains the right to select from these contributions based on editorial requirements and subject to online terms and conditions and BBC editorial guidelines . For more information about how the BBC handles your personal data, see here .
Made with Hearken | Terms of Service | Privacy Policy
If you are reading this page and can't see the form you will need to visit the mobile version of the BBC website to submit your question or comment or you can email us at [email protected] . Please include your name, age and location with any submission.
Sign up for our UK morning newsletter and get BBC News in your inbox.
Related Topics
Inflation
Bank of England
Mortgages
Five ways to save money on your mortgage
Published
2 hours ago
Force banks to offer mortgage help, says Labour
Published
1 day ago
Bank boss denies wanting slump after 5% rate shock
Published
18 hours ago
'My savings are fast becoming worthless'
Published
4 hours ago
How the interest rate rise affects you
Published
23 hours ago
View comments
Top Stories
LIVE
.
Tributes paid to Titan passengers as safety questions grow
James Cameron: Titan sub company cut corners
Published
1 hour ago
How Modi and Biden turbocharged India-US ties
Published
5 hours ago
Features
James Cameron: Titan sub company cut corners
What happens next in Titanic sub operation
' It's a catastrophe. Everything was washed away'
Ca rly Rae Jepsen on Glastonbury: I'll get lost like a child
Wee kly quiz: How do Zuck and Musk plan to face off?
Why Kenya struck a big deal with the EU on its own
Stude nts switch to AI to learn languages
Why is it so rare to hear of Western cyber-attacks?
Europe' s most expensive painting ever?
Elsewher e on the BBC
How MDMA changed a US white supremacist
The film Churchill tried to ban
How one te mple feeds 100,000 people a day
Most Read
1
James Camer on: Titan sub company cut corners
2
Musk and Zu ckerberg agree to hold cage fight
3
Russian dip lomat squatting is no threat - Australia
4
Titan sub i mplosion: How did it happen?
5
Parts of mi ssing sub's cover found, expert says
6
What will T itan investigators be looking for?
7
'It's a cat astrophe. Everything was washed away'
8
Steps refus e Dubai gig over sexuality clause
9
How Modi an d Biden turbocharged India-US ties
10
Tributes pa id to Titan sub 'true explorers'
BBC News Se rvices
On your mob ile
On smart sp eakers
Get news al erts
Contact BBC News
Home
News
Sport
Reel
Worklife
Travel
Future
Culture
Music
TV
Weather
Sounds
Terms of Us e
About the B BC
Privacy Pol icy
Cookies
Accessibili ty Help
Parental Gu idance
Contact the BBC
Get Persona lised Newsletters
Why you can trust the BBC
Advertise w ith us
Do not shar e or sell my info
© 2023 BBC. The BBC is not responsible for the content of external sites.
Read about our approach to external linking.
| 1,000 mlx | |
| 25 | |
| 1 |