UK Treasury chief Jeremy Hunt reached an agreement with mortgage lenders on Friday for homeowners to be granted a 12-month grace period before repossession proceedings can begin. In an interview on Sky News, Hunt said there would be a mandatory minimum 12-month period before repossession could occur without the homeowner's consent.
The decision came after the Bank of England hiked interest rates 50 basis points to a 15-year high of 5% to counter stubborn inflation, which remained unchanged last month at 8.7%, well above the main target of 2%.
The chancellor held a meeting with the leaders of major financial institutions, including Lloyds Banking Group, NatWest Group, Barclays, and Virgin Money.
The banks and chancellor agreed that individuals facing repayment difficulties could approach their mortgage lenders to explore alternative options, without it negatively affecting their credit rating.
Homeowners who choose to extend their repayment term or switch to interest-only plans can revert these changes within six months without any adverse impact on their credit rating.
However, despite escalating rental costs, no specific measures were announced to provide support for tenants.