The government published the Mortgage Charter on 26 June 2023, with lenders representing 85% of the UK mortgage market committing to the measures announced1. The Financial Conduct Authority published a policy statement and revised rules bringing the charter into force on 30 June 2023, effective from that date1.
The protection against early repossession applies from 26 June 2023. Borrowers should not be forced to leave their home within 12 months of a first missed mortgage payment unless they agree to do so or there are exceptional circumstances1. The Financial Ombudsman Service said it would take the new commitments into account when considering mortgage complaints1.
"From 26 June, borrowers won’t be forced to leave their home without their consent unless in exceptional circumstances, in less than a year from their first missed payment."
Most other commitments took effect from 30 June 2023, when the FCA's rule changes came into force1. Under the charter, borrowers who are up to date with payments should be allowed to switch to interest-only payments for six months, or extend the mortgage term to reduce monthly payments, with the option to revert to the original term within six months1. The debt charity guidance states that an affordability check should not usually be needed and that this support should not affect the borrower's credit file2.
| Measure | Date it applies |
|---|---|
| No forced sale within 12 months of a first missed payment | From 26 June 20231 |
| Interest-only switch for six months | From 30 June 20231 |
| Term extension, with reversion within six months | From 30 June 20231 |
| Locking in a new rate up to six months early | From 10 July 20231 |
From 10 July 2023, participating lenders were to offer borrowers the chance to lock in a new interest rate up to six months before their old one expires1. The debt charity guidance adds that borrowers should be able to manage the new deal and request a better like-for-like deal from their lender, if available, up until two weeks before the new term starts2.
It is unclear whether the Mortgage Charter applies to second charge mortgages, according to the debt charity guidance2. The Financial Ombudsman Service said it would still expect fair and reasonable treatment for all borrowers facing financial difficulty, whether the new measures are available to them or not1.
Why it matters for households
The charter covers borrowers whose lender signed up, which the Financial Ombudsman Service put at lenders representing 85% of the UK mortgage market1. For someone who misses a first mortgage payment, the practical effect is that a lender should not force a sale of the home for at least 12 months, unless the borrower agrees or there are exceptional circumstances1. That protection runs from 26 June 20231.
The payment options are aimed at borrowers worried about meeting payments because of increased interest rates, or already struggling2. Switching to interest-only for six months lowers the monthly payment but does not reduce the amount owed, and extending the term lowers monthly payments over a longer period1. Both carry the option to revert to the original term within six months1. The guidance states that lenders should explain how any support they offer will affect a borrower's credit reference file2.
The rate lock-in matters for anyone whose fixed-rate deal is ending: from 10 July 2023, participating lenders were to let borrowers secure a new rate up to six months ahead of the old one expiring1. The Financial Ombudsman Service said it would take the commitments into account when handling mortgage complaints, and that it would look to the FCA's rules in cases related to the measures1.
What happens next
The Financial Ombudsman Service said it would consider the new commitments when assessing mortgage complaints from financial businesses, and would take the FCA's rules into account in cases related to the measures1. Borrowers who think they have not been treated fairly can bring a complaint to the ombudsman after raising it with their lender1. The ombudsman said it would still expect fair and reasonable treatment for all borrowers facing financial difficulty, whether the new measures are available to them or not1.
The Mortgage Charter and how it helps you sets out the commitments in full, and what lenders signed up to covers the regulatory side. For the rules that apply when payments are missed, see mortgage rules, your rights and protection and how lenders must treat you when you fall behind. Practical steps on mortgage arrears and what a lender must do before going to court are covered separately.
Sources3 cited
- Mortgage Charter: options for people in financial difficulty – Financial Ombudsman service financial-ombudsman.org.uk
- Mortgage arrears | Mortgage repossession | Business Debtline businessdebtline.org
- Mortgage arrears | Scotland | National Debtline nationaldebtline.org
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