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More than 1.1 million borrowers benefit from Mortgage Charter rules, FCA says

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  • 11/06/2024
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More than 1.1 million borrowers benefit from Mortgage Charter rules, FCA says
At least 1.1 million mortgages have benefitted from measures introduced by the Mortgage Charter, the regulator’s data showed.

According to the Financial Conduct Authority (FCA), this accounts for the number of borrowers who locked in a new fixed rate up to six months before their deal ended between July 2023, when the support was introduced, and April this year. 

Over the same time period, more than 284,000 borrowers who secured a new deal six months before their fixed rate matured then went on to obtain an alternative product. 

The Mortgage Charter was created to encourage lenders to help borrowers deal with rising costs. It has 49 signatories, which represent around 90% of the mortgage market. 

This included allowing borrowers to contact their lender for help without impacting their credit file and enabling borrowers who are up to date with payments to switch to a new mortgage when their fixed term ends without another affordability check.

 

Reducing payments 

It also gave borrowers the option to extend their mortgage term or switch to interest-only payments to reduce monthly outgoings, or temporarily defer payments. 

Since coming in, around 159,000 monthly mortgage payments were reduced as people temporarily moved to interest-only payments or extended their mortgage term. 

This accounts for 1.8% of regulated mortgage contracts, the regulator said. 

Its data showed that only 263 term extensions were reversed, which the FCA suggested meant borrowers wanting to reduce their mortgage payments were more likely to choose an interest-only payment period. 

Around 113,000 mortgages are still on temporarily reduced monthly payments due to the Mortgage Charter rules. 

 

Voluntary repossessions 

The Mortgage Charter also states that except in “exceptional circumstances”, borrowers will not be evicted from their homes without their consent less than a year from their first missed mortgage payment. 

Since the charter was introduced, 91 homes were repossessed within 12 months of the first missed payment. Lenders said these were for customer-driven reasons, such as voluntary repossessions and abandoned or vacant properties. 

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