Major lenders, including NatWest, Barclays, and Nationwide, will be reaching out to homeowners whose fixed-rate mortgage deals are coming to an end this year. The Chancellor Rachel Reeves got a commitment from the “big six” banks and building societies (which also includes HSBC, Santander UK, and Lloyds Banking Group) to proactively contact 1.6 million customers whose deals run out between now and the end of 2026.
It comes as the Government and financial institutions met to take stock of the impact of the Iran war, which has triggered an energy crisis and additional costs for British households and businesses already squeezed by cost-of-living pressures. As part of efforts to mitigate the impact on Britons, the Treasury says lenders will set out customers’ options or how to access bespoke support well in advance of the payment changes.
With fixed rate mortgages, the interest rate you pay is locked in place for an agreed period.
After that, mortgages revert to the generally higher Standard Variable Rate (SVR) set by lenders, which doesn’t include deals or discounts.
At the March 26 meeting, which was also attended by the Economic Secretary to the Treasury, Lucy Rigby, and trade association UK Finance, Ms Reeves also “reaffirmed the Mortgage Charter with lenders, keeping clear the safety net in place for anyone worried about their mortgage“, the Government said in a press release.
The Charter allows customers to book a new rate up to six months ahead of their deal ending and switch to a new one with their existing lender without having to undergo another affordability check, the Treasury explains.
The voluntary agreement also offers temporary breathing space, “including a move to interest-only payments for six months, with support discussions not affecting credit scores”.
The Government said lenders reported more customers contacting them for guidance, but that real-time data showed lending “holding up well and arrears remaining low”.
The Treasury said around 86% of mortgages are on fixed rates, meaning most borrowers aren’t under immediate pressure from the dramatic market shifts Iran’s effective blockade of the Strait of Hormuz in response to US-Israeli attacks has caused.
Ms Reeves said: “In uncertain times, people need clear reassurance and practical help. That’s why I’ve brought the biggest lenders together to step up support and make sure anyone who is worried can access the Mortgage Charter options quickly, without their credit score being affected.”