Chancellor Jeremy Hunt said he had made some “important” agreements with banks and lenders, following a meeting on Friday morning.
“There are two groups of people that we are particularly worried about. The first are people who are at real risk of losing their homes because they fall behind in their mortgage payments,” he told broadcasters.
“The second are people who are having to change their mortgage because their fixed rate comes to an end, and they’re worried about the impact on their family finances of higher mortgage rates.”
He said that banks and mortgage lenders had agreed “three very important things”.
“The first is that absolutely anyone can talk to their bank or their mortgage lender and it will have no impact whatsoever on their credit score. That’s really important. A lot of people worry about that.
“The second is that if you are anxious about the impact on your family finances and you change your mortgage to interest-only or you extend the term of your mortgage and you want to go back to your original mortgage deal, within six months, you can do so, no questions asked. No impact on your credit score. That, I think, is going to give people a lot of comfort and stop people worrying about having conversations with their banks when they are worried about their financial situation.
“The final thing is for people who are at risk of losing their home in that extreme situation, the banks and mortgage lenders have a number of things in place. The last thing that they want to do is to repossess a home, but in that extreme situation they have agreed there will be a minimum 12-month period before there’s a repossession without consent.”
Mr Hunt, speaking to broadcasters, said that tackling inflation was he and the Prime Minister’s “number one priority”.
“To everyone who is worried about the high inflation that we have in this economy at the moment, tackling high inflation is the Prime Minister and my number one priority. We are absolutely committed to supporting the Bank of England to doing what it takes.
“We know the pressure that families are feeling. That’s why we’ve introduced big support packages, around £3,000 for the average household this year and last.
“We will do what it takes and we won’t flinch in our resolve because we know that getting rid of high inflation from our economy is the only way that we can ultimately relieve pressure on family finances and on businesses.”
Mr Hunt has defended the extent of the announcement and said it echoed what Martin Lewis and others had been calling for.
The Chancellor said: “We agreed some very important things for people who are worried about their rates going up, not just for people who are in an extreme situation, but the most significant thing is that they can pick up the phone to their bank or their mortgage lender and talk about their situation without any worry that it will impact their credit score.
“If they decide to make their payments easier by extending the period of their mortgage or by going to an interest-only package, they can go back to their original package without any questions asked, without any impact on their credit score, within six months.
“That’s the reassurance that people like Martin Lewis have been saying will make a big difference for families in those situations.”
The Chancellor said that ministers were looking “at everything” to bring down inflation.
Jeremy Hunt was asked why the Government was blaming supermarkets for rising prices, given the Conservatives have been in power for 13 years.
“We are looking at everything that we can do to bring down high inflation caused by the aftermath of the pandemic, by Putin’s aggressive illegal war in Ukraine,” he told broadcasters.
“That doesn’t mean as a government that we say we’re not going to do anything. That’s why we put big support packages in place and we will do what it takes to get to the other side and get high inflation out of our economy.”
