Government announces moves to increase mortgage flexibility 

As higher interest rates mean increases to the cost of borrowing, the chancellor, Jeremy Hunt, has announced measures to take some of the pressure off households.

The reforms mean borrowers will be able to move to interest-only mortgages or extend the period of their loan, without the change affecting their credit score. If they wish, people will be able to switch back to the original terms of their mortgage within six months.

Other options include temporarily deferring payments or part-interest/part-repayment mortgages.

The changes to the rules, agreed by the Chancellor, major lenders and the Financial Conduct Authority, give customers a minimum 12-month period before their homes are repossessed without consent.

People near the end of a fixed rate mortgage deal will also be able to secure a deal up to six months ahead. In addition, borrowers worried about increasing costs have been assured that they can talk to their lender, without it having an impact on their credit rating.

Mr Hunt said the measures give people a, “powerful new tool for managing their monthly budgets”. He added: “These measures should offer comfort to those who are anxious about high interest rates and support for those who do get into difficulty.”

Nathan Emerson of industry body Propertymark welcomed the proposals and called for lenders to act on them. He said: “Our member agents have told us that homeowners are currently being penalised for contacting their bank for support and for switching to interest-only mortgages. Therefore, it is now crucial that the banks and building societies step up to deliver on these promises and help homeowners at such a testing time.”

Read more about this story on the Property Wire website.