Mayor of London urges government to reinstate mortgage payment holidays
Sadik Khan urged the government to reinstate mortgage payment holidays to ease the financial burden on homeowners amid soaring inflation rates.
This follows new survey data from the town hall which revealed that more than a quarter of London homeowners say they will struggle to make their mortgage payments this winter as the cost of living crisis s ‘worsen.
Last month, the average rate on a two-year fixed-rate mortgage rose to 6.53%, the highest since August 2008.
The Mayor of London called on ministers to provide more support to homeowners, including reintroducing mortgage payment holidays.
First introduced in March 2020 as the UK entered the first national lockdown of the Covid-19 pandemic, mortgage payment holidays allowed homeowners to temporarily reduce or defer mortgage payments without affecting their credit rating. credit.
Khan also called for the reintroduction of the mortgage rescue program which, before 2014, allowed households struggling with mortgage repayments to stay in their homes by selling them to social landlords and continuing to live there as tenants.
Khan said it would be the “fair and proportionate approach” to dealing with the ongoing crisis which “is only going to get bigger and bigger and more dangerous”.
He said: “Many London homeowners are already struggling with large monthly mortgage payments, along with rising costs and stagnant wages. With remortgage rates now reaching levels not seen in over a decade due to the economic chaos created by this government, it is essential that ministers act to ensure that Londoners do not pay the price by losing their homes.
The Resolution Foundation estimates that London will be the region hardest hit by rising inflation, with average annual mortgage payments set to rise by more than £8,000 by 2024. An estimated 400,000 households in London will be facing mortgage renewals at that time.
Paula Higgins, chief executive of HomeOwners Alliance, said homeowners are facing a “dark winter” due to a combination of rising mortgage rates and soaring food and energy prices.
She said: ‘We need a government plan to support these households coming out of fixed term mortgages and this needs to be communicated as soon as possible to reduce their financial anxiety.
“We support the Mayor’s call to action and remind homeowners struggling with rising rates that they are not alone. Their first stop should be to talk to their lender about options, such as extending the term of the mortgage to reduce monthly payments, reducing what you pay for a short time, mortgage holidays, or temporarily switching to payments. interest only.