Help for borrowers struggling with their mortgage payments is being kept “under review”, according to cabinet minister Michael Gove, yesterday.
With average 2-year fixed rates having broken the 6% barrier today, UK newswire, Newspage, asked brokers if it is time the Government stepped in.
Jamie Lennox, Director at Dimora Mortgages: “As much as I would love to see support for mortgage customers, it could lead to an even longer period of pain with inflation staying higher for longer. If the Goverment starts to help mortgage holders, tenants will also be asking for the same and it would be a case of where does it end? With many experiencing large increases in rent, there would be public outcry if support wasn’t offered further. What is clear is raising the base rate hasn’t solved the cost-led inflation we are experiencing and I, for one, would rather see a review of the effectiveness of the Bank of England’s monetary policy.”
Riz Malik, Founder & Director at R3 Mortgages: “Those who expect the Government to intervene and provide assistance will be greatly let down, as evidenced by the Truss debacle. It is clear that the Government is shifting responsibility back to lenders, which is rather unjust considering the challenges they currently face. Some lenders struggle to give us sufficient notice when withdrawing mortgage deals, often providing only a few hours’ notice. To prevent the issue from escalating, it is imperative to establish a Mortgage Task Force to thoroughly examine all possible solutions given the severity of the current situation.”
Samuel Mather-Holgate, Independent Financial Advisor at Mather and Murray Financial: “The quickest, easiest and most sensible thing the Government can do is to stop the Bank of England raising interest rates. It could maintain its independence, just change the Bank’s mandate. If the central bank had to consider the economy as well as inflation then rates would be paused, or even lowered, as hikes aren’t doing the job of slowing inflation.”
Gary Bush, Financial Adviser at MortgageShop.com: “I don’t really see Government intervention as being the way through the current mortgage rate crisis. I see the industry not using swaps to gear their mortgage offerings as a start. I have been giving financial advice long enough to see the difference and know that when mortgages related to providers’ savings books, there was much more control over economic disturbances such as a high inflation rate. No one can surely be happy to see fixed rates rising on a daily basis, weeks in advance of a potential Bank of England rate increase in reaction to market conditions, namely swap rates. Perhaps some middle ground needs to be explored as from what I have seen in the past nine months of volatile mortgage rate changes, the market just doesn’t function well enough. We are supposed to live in a technologically advanced financial arena and all I can see is archaic reactionary behaviour.”
Justin Moy, Managing Director at EHF Mortgages: “The Government needs to deal with the source of the problem, not the problem itself. Prolonged low rates and exceptional inflation have created this perfect storm of mortgage turbulence. Giving mortgage holders some form of relief will only make the problem worse in the long term, and will be difficult to police. Swift action to reduce inflation, and keep it at a sensible level, along with sensible mortgage rates, will give us the best outcome in the shortest term.””
Elliott Culley, Director at Switch Mortgage Finance: “It is unlikely anything will change soon. A precedent was set with the help provided on energy bills, but inflation has increased partly due to the borrowing the Government used to support COVID and energy bills. The Treasury would be reluctant at this stage to provide monetary support for this reason. It is more likely responsibility will be put on the shoulders of lenders to support their customers who may be experiencing payment difficulties.”
Graham Cox, Founder at SelfEmployedMortgageHub.com: “The Government, which claims to believe in free markets, should prove it by not intervening. As the Treasury have stated, any mortgage interest relief or other support would increase inflation. It could also spook the markets, sending gilt yields soaring and mean interest rates have to rise even further. Get inflation down, and interest rates will follow. That’s where the Government’s focus should be.”
Amit Patel, Adviser at Trinity Finance: “I doubt very much if the Government will step in to intervene and help borrowers absorb the pain of increased mortgage repayments and I don’t think they should. What is clear is that the Bank of England has so far failed to curb inflation despite increasing the base rate with further increases yet to come. What they ought to do is pause for a moment and begin reducing the base rate towards the end of Q4 or in Q1 2024.”
Luke Thompson, Director at PAB Wealth Management: “No, the Government should not step in. At the end of the day, homeowners take a risk when buying a home and it is up to them to ensure they don’t over-extend themselves when they buy a property. However, what the Government could do is interject with the Bank of England and get them to stop raising the base rate, which is obviously a very blunt instrument and doesn’t appear to be having any impact on inflation as a lot of the issues that are causing inflationary pressures are outside of their scope of control.”
Joe Stallard, Director and Advisor at House and Holiday Home Mortgages: “I’m generally supportive of anything that can be done to help prevent people from losing their homes, including Government help for those with mortgages. However, in reality, this should be reserved for only the trickiest circumstances and maybe we’re not there yet. In truth, people need to take a level of responsibility for themselves through tough times. And let’s not forget renters are seeing increased pressure to pay more, too, and it seems fair they should be part of the conversation if the Government is looking to help out.”
