Mortgage Charter uptake data

The Government’s Mortgage Charter, introduced in June 2023, contains commitments, over and above FCA requirements, made by mortgage lenders. There are 48 signatories, representing around 90% of the mortgage market.

These commitments include:

• not to force a borrower to leave their home without their consent, unless in exceptional circumstances, in less than a year from their first missed payment
   
• to allow customers to lock in a new deal up to 6 months ahead of the end of a fixed rate deal, and to request a better like-for-like deal up until the new one starts, if one is available
   
• without assessing affordability, to permit customers who are up to date with their payments to switch to interest-only payments for 6 months, or to extend their mortgage term with the option to revert to their original term within 6 months

New FCA rules to support Charter commitments

Switching to interest-only payments or reducing a term were possible under our rules, but only after an affordability assessment. We quickly introduced new rules enabling firms to allow a customer to make reduced capital payments (including to zero, and paying interest only) for up to 6 months, or reverse a term extension within 6 months of it taking effect, without taking an affordability assessment.

Key findings

• Data suggests that a minimum of around 760,000 accounts benefited from one or more of the options set out in the Charter, whether explicitly or through a business-as-usual channel.
   
• Around 90,543 mortgage accounts have temporarily reduced monthly payments via the new FCA rules.
   
• Between July 2023 and January 2024, the monthly payments on around 123,000 accounts were reduced as people switched to temporarily paying interest-only or extended their mortgage term. This is around 1.4% of regulated mortgage contracts. The data shows that only 103 term extensions were reversed, which could indicate that borrowers seeking a temporary reduction in their payments are more likely to opt for an interest-only period.
   
• 67 properties were repossessed within 12 months of missing the first payment. Firms report these were for customer-driven reasons, for example voluntary possessions or abandoned/vacant properties.

What’s included in this data

We asked signatory firms for information on the uptake of these new options. Given the pace at which the Charter was implemented, we requested firms provide this information to the best of their ability, which is a different standard to routine regulatory data collections.

• We request monthly data from all Charter signatories.
   
• We ask for information about the support provided during each month (for example the ‘flow’ data rather than ‘stock’ data).
   
• As we ask firms to provide this information to the best of their ability, there may be inconsistencies in how firms respond, and it is not subject to the same quality assurance as regulatory returns. For example, some may give account-level data while others provide customer data.
   
• Some firms may be unable to differentiate between Charter-specific support and business-as-usual variations which they would have offered anyway. Especially for the locking-in of rate switches, which has been standard industry practice for some time.
   
• It is difficult to estimate the total number of borrowers who have taken up one or more Charter options. There is likely to be some overlap between customers who have locked in a new deal and those who have extended their term or switched to interest-only payments.

Latest data

Approximate figures (number of mortgages). The charts below show data under the Mortgage Charter (or business as usual, if unable to differentiate).

Wider support

Charter options form only part of the support which lenders provide borrowers seeking to manage their monthly payments.

All borrowers can contact their lender and discuss their options, as widely publicised through industry’s Reach Out campaign. This support could for example include contract variations or appropriate forbearance measures.

Next steps

We will publish this data quarterly while we continue to ask firms to report on Charter uptake.

We will closely monitor the mortgage market, including through market and consumer level data and firm engagement. We will use data on uptake of the Government’s Mortgage Charter to understand how it has been used, and to inform our policy and supervisory approach.

As part of future releases of Charter uptake data, we plan to publish a summary of how accounts that have received support either under the Charter or by comparable business-as-usual actions (where this cannot be distinguished from support under the Charter) are performing.