Around 1.1 million home loan borrowers have taken advantage of the industry’s Mortgage Charter since it was launched last summer, data from the Financial Conduct Authority shows.
The watchdog adds that 159,000 monthly mortgage payments were reduced as people switched to temporarily paying interest-only, or extended their mortgage terms, between last July 2023 and April this year.
It says: “This is around 1.8% of regulated mortgage contracts. The data shows that only 263 term extensions were reversed, which could indicate that borrowers seeking a temporary reduction in their payments are more likely to opt for an interest-only period.”
It reports that 91 properties were repossessed within 12 months of missing the first payment, primarily as a result of voluntary possessions, or properties that were abandoned or left vacant.
The charter was launched last June after talks between Chancellor Jeremy Hunt and major lenders as home loan rates continued to spike following the Liz Truss mini-Budget in September 2022.
Its commitments include:
- Not to force a borrower to leave their home without their consent, unless in exceptional circumstances, in less than a year from their first missed payment
- To allow 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 one is available
- To allow customers who are up to date with their payments to switch to interest-only payments for six months, or to extend their mortgage term with the option to revert to their original term within six months, without assessing affordability
The charter is signed by 49 lenders – including Barclays, HSBC and Santander — who represent around 90% of the mortgage market.
