(Bloomberg) -- The Treasury and the Financial Conduct Authority have told lenders to act flexibly if their customers get into difficulties repaying their mortgages, as the UK looks to soften the impact of rising interest rates and a spluttering economy.
Chancellor of the Exchequer Jeremy Hunt and the regulator met with mortgage lenders Wednesday to discuss the market and support measures.
The FCA’s draft guidance includes options such as extending the term of a mortgage, switching temporarily to interest-only, moving to a different interest rate or making reduced monthly payments for a temporary period, according to a press release.
Lenders also recommitted to enabling mortgage holders to switch to a new fixed rate mortgage, without a new affordability test, as long as consumers are up to date with their payments, according to a separate statement by the Treasury on Wednesday.
The support comes with UK house prices falling at the sharpest pace in 14 years in November after higher rates reduced the affordability of properties, adding to evidence that the housing market may be headed into a more protracted downturn.
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(Adds details from Wednesday’s meeting throughout.)
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