Opposition parties have called on the Chancellor’s summit with lenders over the mortgage crisis to come up with concrete plans to help borrowers who will struggle to pay their home loans.
Labour shadow Chancellor Rachel Reeves said it has a five-point plan to help homeowners who face mortgage increases that are set to jump by thousands of pounds annually.
It covers requiring lenders to allow borrowers to switch to interest-only mortgage payments for a temporary period. Requiring lenders to allow borrowers to lengthen the term of their mortgage period.
Ensuring lenders reverse any support measures when borrowers request this.
Requiring lenders to wait a minimum of six months before initiating repossession proceedings.
And instructing city watchdog, the Financial Conduct Authority to urgently issue consumer guidance stating that borrowers making temporary switches to interest-only mortgage payments and lengthening the term of their mortgage period should not see their credit score affected.
Reeves says: “Our 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.”
The Liberal Democrats have called for a £3bn mortgage protection fund to help families who are seeing their repayments soar.
This would mean that homeowners who see their repayments increase by more than 10% of their income are able to apply for grants of up to £300 a month to cover the costs.
Lib Dem leader Sir Ed Davey says the move would be paid for by reversing cuts to taxes on banks dating back to 2016 and is necessary because millions of homeowners are paying a “Conservative property premium” as a result of the “chaos” caused by the Liz Truss government’s tax-cutting mini-Budget in September.
However, the government says this move would be “inflationary” and it stands by the Bank of England’s base rate rise by 50 basis points to 5% yesterday, as it bids to battle inflation, currently stuck 8.7% for the second month in a row.
