Martin Lewis said a 'huge payment shock' is coming for everyone with a mortgage and has dated exactly when it will hit households. The Money Saving Expert founder said he is working with banks and the UK Government to try to find some fixes before the worst of the crisis comes.
Speaking on his Martin Lewis Podcast, he told listeners that there will be a 'huge mortgage shock' in the spring when interest rates peak and mortgage borrowers come off their previous fixed terms. He said: "Martin Lewis said: “Those who already have mortgages are gonna face ‘huge payment shock’ when their current mortgages end and they’re moved onto far higher rates.
“That’s likely to peak in the spring, when it’s thought, and nobody truly knows, interest rates will be at their high. We all know interest rates go up and mortgage costs go up. There are a huge number of people whose fixes will be ending next year, and whose fixes are ending right now and they will all be seeing huge rises."
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Martin then revealed that a meeting is going to be held with the government to try to get a fix in place, YorkshireLive reports.
“I had a meeting with Jeremy Hunt a few days before the autumn statement. In there, I talked about my great concern for the spring and the huge payment shock many people will face when their current mortgage deals come to an end and they have to move onto a new one
“I suggested we need to look at measures of forbearance and flexibility in order that we are able to make sure people get over that hump. Now this is not about manipulating the housing market, it’s not about any great huge changes.”
Martin told his listeners he with speak to the chancellor and several bank bosses in a room for a mortgage summit to discuss how to help people. He said measures such as mortgage payment holidays, shifting to interest only, getting rid of bureaucracy and scrapping stress tests at 7% that stop people borrowing at 4% and end up leaving them at 6% instead.
He said: “I have a long list of well researched suggestions and we will see what we can do. I’m not promising revolution but I hope for some minor iterative change that might make things easier for people...Lenders don't want people in arrears or defaulting. That's expensive for them and they don't make money.
"They do have a vested interest in making it easier. It's not quite bashing heads together, it's more getting everybody in the room to smooth out some of the humps in the process so as to allow people to smooth out their finances." Martin said he hopes there might be some results from the mortgage summit this week.
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