HM Treasury has published their Mortgage Charter Policy Paper following meetings in December 2022 and June 2023. In this, they have set out agreed commitments made by Lenders to their mortgage borrowers to try to support them whilst high inflation rates remain an issue. It is important to note that this charter is in relation to residential mortgages alone and does not extend to Buy-to-Let mortgages.

 

The policy paper details the range of measures agreed by lenders and the signatories of the Charter. These are as follows.

 

Lenders representing approximately 90% of the mortgage market (including the major high street lenders) have agreed:

 

• That any borrower worried about their mortgage repayments can contact their lender for help and guidance, without any impact on their credit file.
• To support borrowers that are up to date with their payments and not looking to change the term or type of their mortgage, nor borrow more, to switch to a new mortgage deal at the end of their fixed rate deal without a further affordability check.
• To provide timely information to borrowers when their current rate is due to end.
• To offered tailored support from highly trained staff where the borrower is struggling.

 

As well as the above four bullet points, the Signatories have agreed:

 

• From 26th June, a borrower will not be forced to leave their home without their consent unless in exceptional circumstances, in less than a year from their first missed payment.
• From 10^th July, a borrower approaching the end of a fixed rate deal will have the chance to lock in a deal up to six months ahead. They will also be able to manage their new deal and request a better like for like deal with their lender right up until their new term starts, if one is available.
• Customers who are up to date with their mortgage payments may switch to an interest-only payments for six months or extend their mortgage term to reduce their monthly payments and have the option to revert to their original term within 6 months by contacting their lender

 

Whilst the prospect of a borrower not being forced to leave their home in less than a year from their first missed payment may seem like a significant change to the possession procedure, it is important to note that this does not prevent the Court from granting a Possession Order, it simply means that possession will not be taken by bailiffs but borrowers can still hand over possession by consent.

 

We will continue to monitor the Charter and its effects on the market.

 

You can view the Charter and Lenders involved here: https://www.gov.uk/government/publications/mortgage-charter/mortgage-charter