There have been calls by many financial commentators that the government must step in to help those struggling repaying their mortgages in light of months of rises in the Bank of England base rate.
The situation is receiving particular attention due to the already smouldering cost of living crisis that has placed many households squeezing anything out to make budgets balance.
In response to these calls, the chancellor has revealed a number of statistics regarding the state of the housing market, in particular some interesting numbers around the current mortgage book for the UK.
In the first three months of this year less than one percent (0.86%) of mortgages are in arrears on their payments - this can be directly compared to the last financial crisis in 2009 where the figure was over three times higher at 3.32%.
The Chancellor's figures state people (on average) are spending around 5 percent of disposable income on mortgages compared to 10 percent 30 years ago and before the recent cost of living issues. It's not clear whether these averages are the mean or median figures.
Those at risk of the biggest shock of the successive base rate rises are the people who have been enjoying the historically low interest rates - basically people who had fixed their mortgage rate for a number of years when the base rate was close to 0 percent. These people will see a huge jump when coming to remortgage. However, the Chancellor's stats counter this with figures for the last 12 months of homeowner remortgages. These show, on average (mean? median?), the LTV (loan to value) was around 50 percent - this means half the value of the property has been paid off - with the other half still requiring mortgaging.
The riskier side of the mortgage market are those with higher loan to values, but non-BTL (buy to let) mortgages with over 75 percent LTV's make up less than ten percent of all mortgages.
Taking these stats into account and aiming support at those in need the most, the Chancellor laid out the following support measures:
- Home repossessions will not occur until at least 12 months after the mortgage first went into arrears.
- Mortgage customers will be allowed to find a fixed rate mortgage up to six months before their current mortgage rate expires - essentially allowing today's rates to be applied for their remortgage six months in advance - potentially avoiding future rate rises.
- Some options that can be utilised without affecting credit scores include switching to interest only, or extending mortgage terms in order to reduce payments temporarily for a period of up to six months. The mortgage holder(s) will be able to apply for these without going through new checks.
- Staff at banks and building societies will be able to offer individualised options for those hit hardest like payment deferrals and apportioned interest only payments in order to bring monthly costs into the mortgage holders budget.