Mortgage Charter - Have You Read It?

Companies representing some 85 per cent of all mortgage lending have signed up to a new charter. 

The lenders claims they have been working to proactively support their customers and will redouble these efforts to help borrowers through the coming months. They have already proactively contacted millions of customers to offer additional support and following the agreement of this new Charter will be taking further steps to support borrowers. 

Have you read the charter in full? It’s not unduly long but it worth a read as it defined a set of standards that lenders and their representatives will adopt when helping their regulated residential mortgage borrowers worried about higher rates.

All lenders have agreed: 

• Anyone worried about their mortgage repayments can contact their lender for help and guidance, without any impact on their credit file and we would encourage you to contact your bank who are there to help.
• Support for customers who are up-to-date with payments to switch to a new mortgage deal at the end of their existing fixed rate deal without another affordability check2.
• 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. This could mean extending their term to reduce their payments, offering a switch to interest only payments, but also a range of other options like a temporary payment deferral or part interest-part repayment. The right option will depend on the customer’s circumstances.

Signatories to this Charter have agreed: 

• From 26th June, a borrower will not be forced to leave their home without their consent unless in exceptional 
• These commitments do not apply to Buy-to-Let mortgages
• Applies to 97 per cent of the mortgage market, where customers are up to date with payments and not seeking to borrow more or change their repayment type or term. 
• 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 is available.
• A new deal between lenders, the FCA and the government permitting customers who are up to date with their payments to:
• Switch to interest-only payments for six months or extend their mortgage term to reduce their monthly payments and give customers the option to revert to their original term within 6 months by contacting their lender.

These options can be taken by customers who are up to date with their payments without a new affordability check or affecting their credit score. Customers who are currently in arrears should continue to work with their lender for the support that they need. 

The government confirmed it has delivered: 

• action to make Support for Mortgage Interest easier to access; if you are on Universal Credit you can now receive help with your mortgage interest payments after three months;
• record levels of funding for the Money and Pensions Service to provide debt advice in England.

The FCA has introduced: 

• new guidance clarifying how lenders can support borrowers impacted by the rising cost of living;
• information for borrowers on the options and support available if they are struggling with payment.

UK Finance, the trade association for mortgage lenders, will be launching a communications campaign to ensure customers know what to expect if they need support from their lender. 

The lenders, UK finance and the FCA have committed to implementing the full Charter at pace. It is important that borrowers have access to these new measures as soon as possible. It will require changes to the FCA rulebook as well as changes to lenders’ procedures. They will move quickly over the coming days and weeks to implement the Charter and will provide Government with an update on progress by Friday 30 June. 

The FCA will work rapidly with signatories in order to adopt the necessary rules by Friday 30 June. The FCA’s Consumer Duty coming into force in July will also enable the FCA to support implementation of the Charter by its signatories. 

The Prudential Regulation Authority have confirmed that the measures agreed in this Charter are not expected to lead to an immediate or automatic increase in capital requirements for banks, depending on the circumstances. 

Participating mortgage lenders, led by UK Finance, will launch a communications campaign ensuring borrowers know what to expect when they contact their lender. 

Lenders who have signed up to this Charter 

Barclays

Bank of Ireland UK
Bath Building Society
Buckinghamshire Building Society

The Co-operative Bank, including Platform and Britannia Coventry Building Society
Darlington Building Society
Earl Shilton Building Society
Ecology Building Society

Family Building Society
Furness Building Society
Glasgow Credit Union
Hinkley & Rugby Building Society
HSBC, including First Direct  

Leeds Building Society
Leek Building Society
Lloyds, including Halifax and Scottish Widows Loughborough Building Society
Melton Mowbray Building Society
Nationwide Building Society
Natwest, including RBS and Ulster Bank
Newcastle Building Society
Nottingham Building Society

Principality Building Society
Progressive Building Society
Santander
Scottish Building Society
Skipton Building Society
Suffolk Building Society

TSB
The Vernon Building Society

Tipton & Coiseley Building Society

United Trust Bank Limited
Virgin Money, including Clydesdale Bank and Yorkshire Bank West Bromwich Building Society
Yorkshire Building Society