Chancellor Jeremy Hunt has reached an agreement with banks and lenders to assist mortgage holders grappling with high interest rates, but has declined to provide government support.
Following a meeting with banks and building societies at Downing Street on Friday to address the crisis, Mr Hunt stated that they had agreed to implement a number of new mortgage rules.
These include a minimum 12-month period before repossessing homes. Furthermore, he announced that lenders had agreed to allow struggling borrowers to extend their mortgage terms or temporarily switch to an interest-only plan with "no questions asked".
In discussions with the heads of HSBC, Santander, Barclays, and others, Mr Hunt expressed particular concern for families at risk of losing their homes and those whose payments may skyrocket as their fixed-term rates expire. To provide greater flexibility for those experiencing financial anxiety, he stated, "They agreed to offer the option for borrowers to switch to interest-only payments or extend the duration of their mortgages for up to six months with no questions asked and no impact on their credit score."
Mr Hunt believes that this will bring comfort to individuals and alleviate concerns about discussing their financial situation with banks.
Additionally, there will be more leniency for homeowners facing the possibility of foreclosure. Mr Hunt highlighted that lenders are keen to avoid repossessing properties and have agreed to enforce a minimum 12-month waiting period before taking such action without consent.
Interest rates were set at a 15-year high on Thursday when the Bank of England announced a new base rate of 5 per cent.
While addressing the issue of persistently high inflation, which has prompted the Bank of England to repeatedly raise interest rates, the Chancellor stressed that it remains the "number one priority" to address.
However, he resisted calls from certain Tory backbenchers to offer substantial support to mortgage holders, fearing that it could further contribute to inflation.
Instead, Mr Hunt emphasised the importance of maintaining a firm stance to curb rising prices, stating that ministers must be "totally resolved and unflinching" in their approach.
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