Mortgages: frequently asked questions
1. I am struggling to find an affordable mortgage. What is the Government doing to make sure suitable mortgages are available?
The Government recognises the importance a sustainable mortgage market to support a stable housing market.
The current low levels of mortgage lending in part reflect a fall in demand, due to economic uncertainty. They also reflect a fall in supply, as banks take a more cautious approach to lending in light of the mistakes made in the run-up to the crisis. The Government is determined that creditworthy borrowers looking to buy a home or move should have access to affordable mortgages.
The Government’s tough action on the deficit will help keep market interest rates low. Failure to act could lead to rising costs for borrowers.
The Government is also working with the FSA, the Bank of England and international authorities to maintain stability in the financial system. This will help ensure banks and building societies have access to the funds they need to lend.
The Government is committed to ensuring an open and competitive market, which will ensure that the banks and building societies lend appropriately to home buyers.
2. I feel that I have been treated unfairly by my mortgage lender. How can I make a complaint?
The Government is determined that lenders should treat borrowers fairly.
Borrowers who feel that they have been missold their mortgage, for example those who did not have the terms of their contract (including rates or charges) properly explained at the time of entering into the arrangement should first make a formal complaint to their lender. Customers who then feel that their complaint has not been dealt with satisfactorily are able to refer the matter to the Financial Ombudsman Service (FOS) – an independent body set up to provide arbitration in such cases.
The FOS can be contacted through the FOS website or by telephone at 0845 080 1800.
Although the Treasury sets the legal framework for the regulation of financial services, it does not have investigative or prosecuting powers of its own and is not able to intervene in individual cases. Decisions concerning the pricing of loans, including the level of interest charged, remain commercial decisions for banks and building societies.
3. My mortgage lender has benefited from taxpayer support. Why can’t the Government use its influence to make sure customers get a good deal?
The Government’s stakes in financial institutions that have benefited from public sector investment are managed by UK Financial Investments Limited (UKFI) on the Government’s behalf. UKFI is required to operate at arm’s length from HM Treasury, and manages the public’s stakes in banks on a commercial basis, with the objective of protecting and creating value for the taxpayer as shareholder. This means that even where public money has been made available to banks, the Government is not able to intervene in commercial matters such as pricing or product design. To do so would be contrary to this principle of independence, and may be anti-competitive or distort the market.
4. I am finding it difficult to meet my mortgage payments. What help is available?
If homeowners are having trouble paying their mortgage, or are worried about meeting payments in the future, it is vital to make early contact with their lender. Detailed information on the wide range of free, practical support and financial assistance available can be found on the Directgov website (opens in new browser window).
A number of organisations provide free, impartial advice on money and debt management. These organisations include:
There are also a number of Government schemes aimed at helping people avoid repossession. These include:
- Support for Mortgage Interest. This helps pensioners and those out of work to meet their mortgage payments.
- The Mortgage Rescue Scheme. This allows eligible borrowers who face losing their home to either sell a share in their home to reduce monthly payments, or sell their home and remain in the property as a tenant paying an affordable rent to a social landlord.
- Protection in the Courts through the Pre-Action Protocol, which makes it clear that repossession must always be the last resort for lenders.
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