Editor's Pick

The new Mortgage Charter: What is it and which lenders have signed up?

Christina Hoghton
Written By:
Christina Hoghton

The package of measures is designed to support borrowers who are worried about meeting their mortgage payments

UK mortgage lenders and the Financial Conduct Authority have agreed a set of standards that they will adopt when helping residential mortgage borrowers worried about higher rates.

Lenders representing 85% of the residential market have signed up to the measures in the new Mortgage Charter in addition to the help they already provide to borrowers.

Chancellor Jeremy Hunt said: “Following our meetings in December and June the principal mortgage lenders have agreed to set out here the commitments they make to their regulated residential mortgage borrowers. The Financial Conduct Authority has set out actions it will take to support these commitments.

“I welcome their moves to support borrowers. These measures should offer comfort to those who are anxious about high interest rates and support for those who do get into difficulty.”

David Postings, CEO UK Finance, added: “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.”

What is in the new Mortgage Charter?

All lenders have agreed:

• Anyone worried about their mortgage repayments can contact their lender for help and guidance, without any impact on their credit file.
• 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.
• Lenders will provide well-timed information to help customers plan ahead should their current rate be due to end.
• Lenders will offer tailored support for anyone struggling and deploy highly trained staff to help customers. This could mean extending their term to reduce their payments, offering a switch to interest only payments, but also a range of other options like a temporary payment deferral or part interest-part repayment. The right option will depend on the customer’s circumstances.

Signatories to this Charter have agreed:

• From 26th June, a borrower will not be forced to leave their home without their consent unless in exceptional circumstances, in less than a year from their first missed payment.
• Customers 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.
• A new deal between lenders, the FCA and the government permitting customers who are up to date with their payments toswitch 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.

These options can be taken by customers who are up to date with their payments without a new affordability check or affecting their credit score. Customers who are currently in arrears should continue to work with their lender for the support that they need.

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

The lenders, UK finance and the FCA have committed to implementing the full Charter at pace so that borrowers have access to these new measures as soon as possible.

Which lenders have signed up?

  • Barclays
  • Natwest, including RBS and Ulster Bank
  • Lloyds, including Halifax and Scottish Widows
  • Nationwide Building Society
  • HSBC, including First Direct
  • Santander
  • Virgin Money, including Clydesdale Bank and Yorkshire Bank
  • TSB
  • Scottish Building Society
  • Buckinghamshire Building Society
  • Newcastle Building Society
  • Hinkley & Rugby Building Society
  • Nottingham Building Society
  • Principality Building Society
  • Suffolk Building Society
  • West Bromwich Building Society
  • Loughborough Building Society
  • Family Building Society
  • Coventry Building Society
  • Yorkshire Building Society
  • Skipton Building Society
  • Leeds Building Society
  • Bath Building Society
  • Ecology Building Society
  • The Vernon Building Society
  • Leek Building Society
  • Furness Building Society
  • Melton Mowbray Building Society
  • Glasgow Credit Union
  • Darlington Building Society
  • Progressive Building Society
  • Co-Op Bank.