Earlier today, Hunt met with chief executives of major banks, including Lloyds Banking Group, Nationwide, NatWest and Virgin Money, together with regulator the Financial Conduct Authority (FCA), to discuss what further support could be offered to struggling mortgage borrowers.

The lenders – which cover over 75% of the market – agreed to a new mortgage charter, including:

• Anyone worried about their mortgage repayments can call their lender for information and support, without any impact on their credit score
• Customers won’t be forced to have their homes repossessed within 12 months from their first missed payment
• Borrowers approaching the end of a fixed rate deal will be offered the chance to lock in a deal up to six months ahead. They will also be able to apply for a better deal right up until their new term starts, if one is available
• Customers will be allowed to switch to an interest-only mortgage for six months, or extend their mortgage term to reduce their monthly payments and switch back to their original term within the first six months, if they choose to. Both options can be taken without a new affordability check, or the move affecting their credit score
• Support for customers who are up-to-date with payments to switch to a new mortgage deal at the end of their existing fixed rate deal without another affordability check.
• Lenders to provide well-timed information to help customers plan ahead should their current rate be due to end.
• Offer tailored support for anyone struggling and lenders will deploy highly trained staff to help customers. This could mean extending their term to reduce their payments, offering a switch to interest- only payments, but also a range of other options like a temporary payment deferral or part interest-part repayment. The right option will depend on the customer’s circumstances, the government added.

The Chancellor of the Exchequer, Jeremy Hunt, said: “There are two groups of people that we are particularly worried about. The first are people who are at real risk of losing their homes because they fall behind in their mortgage payments. And the second are people who are having to change their mortgage because their fixed rate comes to an end, and they’re worried about the impact on their family finances of higher mortgage rates.

“So today I agreed with the banks and the principal mortgage lenders and the Financial Conduct Authority three very important things.

“These measures should offer comfort to those who are anxious about high interest rates and support for those who do get into difficulty.”

Martin Lewis, founder of MoneySavingExpert.com, who met with the chancellor to discuss the mortgage concerns, said: “I met the Chancellor on Wednesday and reiterated that the minimum we needed was to ensure that when people asked for help from lenders, they knew that if things changed, it wouldn’t be detrimental to their financial situation and their credit scores would be protected as much as possible.

“I’m pleased to see it looks like the Chancellor has listened and those measures are going to be put in practice by the banks. We need to make sure everybody knows their rights if they are in trouble with their mortgage, so they can feel comfortable speaking with their lender and understand the measures that they can request for help.”

Mortgage borrowers struggling

Figures from StepChange reveal that around seven million mortgage holders are struggling to keep up with their bills.

Static inflation and the increasing base rate has also lead to an increase in mortgage pricing, which experts warn could lead to monthly mortgage payments rising dramatically for those coming to end of their fixed rate periods.

Both Hunt and Prime Minister Rishi Sunak ruled out introducing a Government scheme, such as a mortgage interest relief scheme at source, arguing that injecting large amounts of cash into the economy could further inflation.

Labour and Liberal Democrats had called on the Government to do more to offer support to mortgage borrowers, with the latter urging the Government to reverse bank tax cuts and then using that to assist struggling homeowners.