123,000 mortgage holders reduce rates under Mortgage Charter: FCA

The FCA has provided the first publication of data from firms who have signed up to the Government’s Mortgage Charter.

Related topics:  Mortgages,  Regulation,  FCA
Rozi Jones | Editor, Barcadia Media Limited
25th March 2024
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A minimum of around 760,000 accounts have benefited from one or more of the options set out in the Government's Mortgage Charter, the FCA has said.

The Government’s Mortgage Charter, introduced in June 2023, contains a series of commitments made by mortgage lenders. There are 48 signatories, representing around 90% of the mortgage market.

These commitments include:

- not to force a borrower to leave their home without their consent, unless in exceptional circumstances, in less than a year from their first missed payment,

- to allow customers to lock in a new deal up to six months ahead of the end of a fixed rate deal, and to request a better like-for-like deal up until the new one starts, if one is available,

- without assessing affordability, to permit customers who are up to date with their payments to switch to interest-only payments for six months, or to extend their mortgage term with the option to revert to their original term within six months.

Switching to interest-only payments or reducing a term were previously possible under FCA rules, but only after an affordability assessment.

The latest FCA data shows that around 90,543 mortgage accounts have temporarily reduced monthly payments via the new FCA rules.

Between July 2023 and January 2024, the monthly payments on around 123,000 accounts were reduced as people switched to temporarily paying interest-only or extended their mortgage term. This is around 1.4% of regulated mortgage contracts. The data shows that only 103 term extensions were reversed, which could indicate that borrowers seeking a temporary reduction in their payments are more likely to opt for an interest-only period.

67 properties were repossessed within 12 months of missing the first payment. Firms report these were for customer-driven reasons, for example voluntary possessions or abandoned/vacant properties.

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