Around 1.7 million borrowers have been supported by the government’s Mortgage Charter, figures from the Financial Conduct Authority show.
The FCA data shows that around 149,000 mortgages have had their monthly payments temporarily reduced through the new FCA rules.
The monthly costs of approximately 214,000 mortgages fell because people temporarily switched to repayment or extended the term of their mortgage. This represents approximately 2.6% of regulated mortgage contracts.
Of those who extended their mortgage term, 547 reversed this. According to the FCA, this suggests that borrowers looking for a temporary reduction in payments are more likely to opt for an interest-only period.
The latest figures show that 159 properties were repossessed within 12 months of missing the first payment.
Companies report that this was for customer-driven reasons, for example voluntary possessions or abandoned/vacant properties.
Under the Charter, lenders agreed to provide a number of options to help struggling borrowers reduce their payments for a forbearance period.
The FCA says some of these forbearance measures would also have been offered as part of lenders’ normal business policies.
It is therefore not possible to completely isolate the actions taken under the Charter.
Quilter financial planner Holly Tomlinson says: “The Mortgage Charter data is interesting, with around 1.7 million mortgages benefiting from the flexibility options introduced. Measures such as temporary payment reductions and interest-only terms have helped 214,000 borrowers manage their repayments.”
“However, it remains unclear whether many of those who have benefited from the Charter have done so anyway, as some measures are generally adopted as standard practice across the sector.”
“For example, 1,738,489 people with a mortgage where the end of a fixed interest rate agreement is about to expire, are stuck in a new agreement up to six months before the expiry date. This is generally standard practice and accounts for the majority of those who have benefited.”
“Similarly, 410,345 people with mortgages took out a new deal up to six months before the due date, before the start of the new deal, an alternative deal.”
“What is clear from this data is that, while things are improving in the property market, we are not completely out of the woods yet and those refinancing in the new year are in for a nasty shock.”