Mortgages: Government Assistance

(asked on 10th January 2023) - View Source

Question to the HM Treasury:

To ask His Majesty's Government what plans they have, if any, to support households with mortgages from the increased cost of living due to interest rate rises.


Answered by
Baroness Penn Portrait
Baroness Penn
Minister on Leave (Parliamentary Under Secretary of State)
This question was answered on 18th January 2023

In December, the Chancellor held a roundtable with the major mortgage lenders, the Financial Conduct Authority (FCA) and Martin Lewis to discuss support for vulnerable mortgage borrowers. In this meeting, attendees confirmed the support lenders will provide and the steps borrowers should take to help those who are struggling return to a position where their mortgage is affordable and sustainable over the long term. The Chancellor also made clear his expectation that every lender live up to their responsibilities and support any mortgage borrowers who are finding it tough right now.

If mortgage borrowers fall into financial difficulty, or think they may struggle to keep up with payments in the future, it is vital they make contact with their lender early. FCA guidance requires firms to provide support through tailored forbearance options. This could include a range of options depending on individual circumstances.

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. Those eligible are entitled to help paying the interest on up to £200,000 of their loan. 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 financial 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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