Lenders representing an estimated 85% of the mortgage market have signed up to a Mortgage Charter that is being introduced by the Government to help struggling borrowers.

Along with the Financial Conduct Authority (FCA), lenders have agreed with the Chancellor on a set of standards they will adopt when helping their regulated residential mortgage borrowers worried about higher interest rates.

Last Friday, several of the UK’s largest mortgage lenders including Lloyds, NatWest, and Barclays, met with Jeremy Hunt and agreed to offer more flexibility to homeowners struggling to cope with soaring interest rates.

This followed another Bank of England (BoE) base rate increase on Thursday last week, to 5%, after the Bank’s Monetary Policy Committee announced a further rise of 0.5 percentage points on its previous level to mark the thirteenth meeting in a row that has seen interest rates climb.

Chief executive of the FCA, Nikhil Rathi, commented: “This Charter builds on the work we and lenders have done over recent years to ensure those who get into difficulty receive the support they need. The additional commitments from signatories provides customers with clarity and certainty on how they can expect to be treated.

“Mortgages remain a priority for the FCA, and we will continue to work closely with lenders to ensure borrowers are supported, as part of our work on consumers who might face financial difficulties.”

All lenders have now agreed that anyone worried about their mortgage payments can contact their lender for help and guidance without any impact on their credit file. There will also be support for customers who are up-to-date with payments to switch to a new mortgage deal at the end of their existing fixed rate deal without another affordability check, while lenders will provide well-timed information to help customers plan ahead should their current rate be due to end.

Signatories to the Government’s Charter have agreed that a borrower will now not be forced to leave their home without their consent unless in exceptional circumstances, in less than a year from their first missed payment.

With effect from 10 July, customers of signatory lenders 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.

There is also a new deal between lenders, the FCA and the Government permitting customers who are up to date with their payments to switch to interest-only payments for six months or extend their mortgage term to reduce their monthly payments and give customers the option to revert to their original term within six months by contacting their lender.

UK Finance, the trade association for mortgage lenders, has confirmed it will be launching a communications campaign to ensure customers know what to expect if they need support from their lender.

CEO of UK Finance, David Postings, said: “Lenders recognise and understand this is an anxious time for mortgage customers and there is a lot of support available. Lenders have been contacting and supporting millions of customers and are working with the government and regulators to continue to deliver a range of support options for customers.

“Anyone who is worried about their finances should contact their lender to find out what options are available to help. Contacting your lender to talk about the options available will not impact your credit score.”

One of the lenders to sign up to the Government Charter is Newcastle Building Society, and chief executive, Andrew Haigh, added: “We understand that current events are a growing cause for concern and in some cases, financial difficulty, particularly for those with mortgages. We’re committed to giving customers the information and help they need so they can make the right decision for their particular circumstances.

“Newcastle Building Society is a signatory to the Mortgage Charter, which will introduce some additional measures for those experiencing mortgage payment difficulties in what are very challenging times.

“We are well prepared to help our customers as we have a comprehensive range of mortgage support options already in place, and encourage our customers to speak with our highly trained team in the first instance to understand the best solution for their individual circumstances.”

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