LONDON (Reuters) – Britain’s main opposition Labour Party set out plans that it said would ease the financial strain on households caused by growing mortgage costs which are shaping up to be a big issue ahead of the country’s next national election.
Labour said it would require lenders to allow borrowers to lengthen their mortgage period and switch to interest-only mortgage payments for a temporary period, with guidance that such moves should not impact borrowers’ credit scores.
“Our five-point plan to ease the Tory mortgage penalty offers practical help now, while our commitment to fiscal responsibility and growth will secure our economy for the future,” Labour’s finance spokesperson Rachel Reeves said.
The Bank of England has raised interest rates 12 times since December 2021 but the impact for many mortgage holders is only starting to be felt now as low fixed rates agreed during the COVID-19 pandemic expire.
The central bank is expected to raise interest rates again by a quarter point to a 15-year high of 4.75% in a bid to fight inflation which defied expectations of a slowdown in May to hold at 8.7%.
Finance minister Jeremy Hunt will meet major banks on Friday to discuss how they can help homeowners, but he said the government would not offer borrowers significant financial help.
Britain’s financial watchdog has proposed that COVID era temporary guidance to mortgage providers and other financial firms to help customers struggling to repay their mortgages be made permanent, with an implementation deadline of July 31.
Industry group UK Finance said lenders were ready to help people struggling with mortgage payments and could offer temporary switches to interest-only deals or term extensions, adding that arrears and property repossessions remained low.
(Reporting by Alistair Smout; additional reporting by Huw Jones; editing by William Schomberg)
