Last week in this column I set out my views on inflation and interest rates, including
my belief that the principal driver of inflation is too rapid growth in the quantity of money.
The measures of monetary growth now indicate significant tightening, but it takes time for this to feed through to reduced inflation. My fear is that by continuing with interest rises, the Bank of England is unnecessarily driving the economy into recession.
Nevertheless, Gordon Brown handed responsibility for controlling inflation and the power to set interest rates to the Bank of England and subsequent administrations accepted that settlement. Right or wrong, we are stuck with the decisions that the Bank of England has arrived at.
The increasing rate of interest is a serious worry for many of us with mortgages.
What can we do?
- – if you are on Universal Credit you can now receive help with your mortgage interest payments after three months of claiming the benefit
- The Money and Pensions Service provide debt advice in England. Their debt advice budget is £92.7 million for 2023/24.
The most important thing is that, if you think you will have difficulty with making payments, contact your mortgage provider straight away, don’t wait. Asking what options are available to help will not impact on a borrower’s credit file.
The UK’s major lenders and building societies, working with UK Finance and the Financial Conduct Authority, have agreed a Mortgage Charter with the Chancellor which was announced in Parliament on Monday. The full details of the charter are available on the internet at
https://www.gov.uk/government/publications/mortgage-charter
In summary
- With effect from 10th July 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 becomes available.
- Customers who are up to date with their payments will be allowed to switch to interest-only payments for six months or to extend their mortgage term to reduce their monthly payments. They will have the option to revert to their original term within 6 months by contacting their lender.
- 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. A range of other options like a temporary payment deferral or part interest-part interest-part repayment may be offered. The right option will depend on the customer’s circumstances.
- If the worst comes to the worst a borrower will not be forced to leave their home without their consent, in less than a year from their first missed payment.