Lenders agree to be more flexible with mortgage borrowers

Chancellor Jeremy Hunt has secured promises from banks to be more flexible with mortgage borrowers amid concerns about rising rates.

Average mortgage pricing for a two-year deal has passed 6% and with the Bank of England raising rates to 5% last week, there are concerns that it could get even harder for homeowners or new borrowers to access finance.

Borrowers are also facing rising costs from higher than expected inflation.

Hunt hosted a mortgage lenders summit on Friday where the main banks and building societies committed to letting people make temporary changes to their payment terms for six months without affecting their credit scores.

This may mean extending the mortgage term or moving to an interest-only agreement for a temporary period.

Lenders also said that while repossession is always a last resort, banks have agreed a minimum 12 month period before repossessing a home without consent.

It is unclear how the commitments will be monitored and if or when they expire.

Commenting on the agreements, Karen Noye, mortgage expert at Quilter, said: “The discussions have resulted in increased flexibility and support measures aimed at alleviating the financial burden on borrowers.

"For individuals worried about their mortgage payments, it is essential to understand the available options and take proactive steps to manage their finances effectively.”