CHANCELLOR Jeremy Hunt and banking chiefs today agreed a package of measures to help households struggling with brutal interest rate hikes.
All homeowners will now be able to change their mortgage to interest only and extend the terms of the their loan.
AlamyJeremy Hunt and banking chiefs today agreed a package of measures to help homeowners struggling with interest rate hikes[/caption]
PABarclays UK CEO Matt Hammerstein, Virgin Money CEO David Duffy and Nationwide CEO Debbie Crosby leave Downing Street in London after meeting with Chancellor Jeremy Hunt[/caption]
PACharlie Nunn, Managing Director of Lloyds Banking Group, leaves 11 Downing Street[/caption]
No questions will be asked of those wanting to switch and there will be no impact on credit scores.
Homeowners can also now seek advice from their bank or mortgage lender if they are struggling and this will also have no impact on their credit score.
Finally, in the extreme situation of a repossession, there will be a minimum 12 month period before a house can be taken away without the owners’ consent.
Mr Hunt and banking bosses agreed the package at a meeting in Downing Street this morning.
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The Chancellor pressed mortgage chiefs to ensure they’re doing everything they can to help hard-up homeowners.
Among those at the meeting were CEOs of Lloyds, Santander UK, Nationwide, Barclays UK, NatWest, HSBC and Virgin Money.
It comes as the Bank of England yesterday hiked interest rates by 0.5% to a staggering 5%, the highest level since September 2008.
The rise was imposed in an effort to curb stubborn inflation, which is sitting at 8.7% for the second month in a row.
Rapid interest rate rises have placed homeowners under huge pressure, with many arguing they can no longer afford their house.
The average rate on a two-year fixed deal has now soared to 6.01 per cent.
And a typical five-year fixed deal is 5.67 per cent.
Meanwhile, research from the Institute for Fiscal Studies found 1.4 million people are set to lose 20% of their disposable income.
On average, mortgage holders will see repayments hiked by £280 per month – equivalent to 8.3% of disposable income.
And the biggest rise will hit homeowners in their 30s, with payments jumping by £360 per month, or 11% of disposable income.
Bank of England chief Andrew Bailey has faced fury from Tory MPs over his handling of inflation.
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John Baron said: “Consumers and households are paying the price for the Bank of England being asleep at the wheel.”
Brendan Clarke-Smith added: “I hope for everybody’s sake the latest move works because people are now not only questioning the Bank’s independence, but also their leadership.”