Jeremy Hunt Promises Struggling Mortgage Holders Will Not Be Punished
Jeremy Hunt has announced mortgage holders will not be punished if they need extra support from banks (alamy)
3 min read
Chancellor Jeremy Hunt has agreed with banks that struggling mortgage holders will not be punished if they need extra support from lenders in the current economic climate.
Hunt met with representatives from a group of leading banks today and agreed that homeowners who have been hit with the recent interest rate rises will not have their home repossessed for 12 months.
The Chancellor told broadcasters this afternoon that government and banks agreed on "some very important things" including allowing people to open mortgage discussions with their banks without impacting their credit scores.
He has said there are two main groups the Government is particularly concerned about. "The first are people who are at real risk of losing their homes because they fall behind in their mortgage payments," he told broadcasters.
"The second are people who are having to change their mortgage because their fixed rate comes to an end, and they're worried about the impact on their family finances of higher mortgage rates.
He said people will have the option to extend their mortgage or change it to an "interest-only package", where monthly payments only cover the interest charges on a loan within six months.
Hunt added an agreement was struck between the government and banks whereby "there will be a minimum 12-month period before there's a repossession without consent".
"To everyone who is worried about the high inflation that we have in this economy at the moment, tackling high inflation is the Prime Minister and my number one priority. We are absolutely committed to supporting the Bank of England to doing what it takes."
Rachel Reeves, the Shadow Chancellor, said Hunt's response was "weak" and claimed the Conservative Government did not "understand what families are facing".
“Questions remain on how voluntary these measures are. The Government must offer clarity and confidence to homeowners by putting in place requirements now to reassure households. Labour's five-point plan to ease the Tory mortgage penalty offers practical help now, while our commitment to fiscal responsibility and growth will secure our economy for the future," she said.
“Instead of shrugging their shoulders, the Tories should be taking responsibility and acting now.”
Sarah Olney MP, Liberal Democrat Treasury spokesperson, said the new measures announced by hunt were a "sticking plaster for a gushing wound".
"Even after today, bailiffs will still be knocking on people's doors because the Government refused to help. Struggling families still face the looming prospect of losing their homes because the Government crashed the economy and sent mortgage bills spiraling," she said.
"Britain is facing a mortgage crisis and we have a Chancellor who simply isn't up to the job. Jeremy Hunt is failing on his inflation target and now failing to help families with the consequences.
"It adds insult to injury that there is still no help for renters who face unbearable payments. Jeremy Hunt is failing families and pensioners. If he is not going to take decisive action then he should step aside."
Yesterday the Bank of England raised interest rates by 0.5 per cent to five per cent, the highest since 2008.
The Bank hopes tightening monetary policy – how much it costs to borrow – will blunt inflation and lessen price rises. UK inflation remained at 8.7 per cent in May while core inflation – the change in the price of goods and services – rose by 0.3 per cent from 6.8 per 7.1.
UK inflation is four times higher than the Bank's annual target of 2 per cent. Chancellor of the Exchequer Jeremy Hunt backed the latest increase in inflation as if the Bank did not "act now, it will be worse later".
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