![]() A new agreement between lenders, the FCA and the government permitting customers to switch to an interest-only mortgage for six months, or extend their mortgage term to reduce their monthly payments and switch back to their original term within the first six months, if they choose to.They will also be able to apply for a better deal right up until their new term starts, if one is available. Customers approaching the end of a fixed rate deal will be offered the chance to lock in a deal up to six months ahead.Customers won’t be forced to have their homes repossessed within 12 months from their first missed payment.Anyone worried about their mortgage repayments can call their lender for information and support, without any impact on their credit score and we would encourage you to contact your bank who are there to help.The lenders – which cover over 75% of the market - agreed to a new mortgage charter providing support residential mortgage customers. Taken together, this puts the market in a significantly stronger position than before. Lenders have less than 10% ‘owner-occupier mortgages’ on their books with loan-to-value rates greater than 75%, compared to around 25% before the 2008 financial crisis. This indicates homeowners have considerable equity in their homes, which makes it easier to manage repayments. The average homeowner re-mortgaging over the last twelve months had around a 50% loan-to-value ratio. The proportion of disposable income spent on mortgage payments is currently at 5.4%, compared to around 10% in the 1990s and prior to the financial crisis. The FCA reported 0.86% of total residential mortgage balances in arrears in the first quarter of 2023 which is significantly lower than the 3.32% rate in 2009. The latest market indicators (FCA UK Finance) show that mortgage arrears and defaults remain below pre-pandemic levels, which were themselves extremely low.
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