UK Banks Agree On Limited Mortgage Relief Measures For Stressed Borrowers

• British banks agreed in June to give homeowners who miss mortgage payments a one-year grace period before foreclosing and to protect the credit scores of borrowers who change loan terms, as the government sought to ease the strain of rising interest rates.
• The new measures also allow borrowers to potentially change the terms of a mortgage - for example, to pay only interest, or to extend the repayment period - for up to six months without the lender undertaking fresh credit checks, in a move that could pose risks for banks in the longer run.
• Some of the measures announced by the government appeared to replicate policies banks have in place. The finance ministry statement said the newly agreed "mortgage charter" with banks offer tailored support to people struggling with repayments.
• Changes to Britain's mortgage market relative to interest rate changes have a less immediate impact on homeowners than they did in the past. This is because about 85% of mortgage holders are on fixed-rate deals, up from under 30% in the early 2000s.
• Most of those fixed rates only last for up to five years, unfortunately. Around 800,000 mortgages will need to be refinanced in the second half of this year, followed by a further 1.6 million in 2024, out of a total of around 9 million residential mortgages, industry body UK Finance said.

(Source: Reuters)