Mortgages: Government Assistance

Treasury written question – answered on 9th January 2023.

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Photo of Rosie Duffield Rosie Duffield Labour, Canterbury

To ask the Chancellor of the Exchequer, whether his Department is taking steps to provide financial support to people experiencing significant increases in their mortgage costs following the end of a fixed-term mortgage agreement.

Photo of Andrew Griffith Andrew Griffith The Economic Secretary to the Treasury

Around 75% of residential mortgage borrowers are currently on fixed-rate deals and therefore shielded from interest rate rises in the near term. If mortgage borrowers do fall into financial difficulty, or think they may struggle to keep up with payments once their fixed term comes to an end, it is vital they make contact with their lender early. FCA guidance requires firms to provide support through tailored forbearance options. Lenders affirmed that they stand ready to use the forbearance tools available to them to help vulnerable mortgage borrowers at a roundtable hosted by the Chancellor in December.

The Government has also taken a number of measures aimed at helping people to avoid repossession, including offering Support for Mortgage Interest (SMI) loans for those in receipt of an income-related benefit. From spring, the Government will allow those on Universal Credit to apply for an SMI loan to help with interest repayments after three months, instead of nine. We will also abolish the zero earnings rule to allow claimants to continue receiving support while in work and on Universal Credit. In addition, the Government offers mortgage borrowers protection in the courts through the Pre-Action Protocol, which makes clear that repossession must always be the last resort for lenders.

More broadly, the Government has taken decisive action to support households across the UK through the cost-of-living challenges ahead, whilst remaining fiscally responsible. In addition to the £37 billion of support for the cost of living already announced for 2022-23, the Government has announced further support for next year designed to target the most vulnerable households. This cost-of-living support is worth £26 billion in 2023-24, in addition to benefits uprating, which is worth £11 billion to working age households and people with disabilities. The Government is also continuing to provide support to all households through the Energy Price Guarantee, which will save the average UK household £500 in 2023-24.

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