A dad who is facing a £1,300 hike in his monthly mortgage payments because of spiralling interest rates has been told by the prime minister to ‘talk to his bank’.
Rishi Sunak has appeared on LBC Radio this morning to take calls from concerned listeners asking how he can help them amid the cost of living crisis.
One caller explained that he is a married father-of-four in his early 30s with a family to support and has ‘been encouraged to invest in bricks and mortar and become homeowners’.
Jack, from Guildford, asked: ‘But when my current two-year fixed rate expires at the end of this year, my new fixed rate will go up from £1,500 a month to £2,800 a month.
‘As someone who works seven days a week and has paid into the tax system since I left school without claiming a penny back from it, why do I feel like I’m being unfairly punished and what can you do to help me?’
While admitting he was ‘incredibly sympathetic’ about Jack’s situation, which is being ‘faced by many across the country’, Mr Sunak effectively told him to ask the bank to deal with it.
He told Jack: ‘I know you will be anxious about what is going to happen to your mortgage when it comes up for repricing. And we’re taking practical action that will help you and many others.
‘In the short-term, for you or anyone else, you should talk to your bank. What we’ve agreed is a mortgage charter with the lending industry.
‘So you can talk to your bank and you can do a couple of things with them. You could extend the term of your mortgage by say five to 10 years – or you could switch to an interest only mortgage.
‘It sounds like from your payments that you’ve got a particularly large mortgage – a typical payment for someone in the country is about £800 but that would go up to about £1,000 a month at the current rates.
‘But if you do one of the two things that I mentioned, which you can do with your bank at no change to your credit rating, that will save you hundreds of pounds per month on your mortgage payments. So it’s very practical help for millions of families across the country.’
‘I don’t really want to be paying it off until I’m in the grave’
When presenter Nick Ferrari asked what he made of the PM’s advice, Jack replied: ‘I’m already on a 35-year term and that £2,800 was extending that term to 37 years.
‘Now bearing in mind I am in my early 30s, I don’t really want to be paying it off until I’m in the grave.’
Mr Sunak urged him to ‘please talk to your bank’ before implying again that Jack’s mortgage payments were higher than the ‘typical mortgage’.
The PM added: ‘Everyone’s situation is going to be slightly different but a typical mortgage in the UK, people have about 17 years outstanding on it so you can extend it by five or 10 years.’
He then claimed the ‘best way’ for him to help people with high mortgage repayments is to ‘bring inflation down’.
During the last month, 770,000 people in the UK failed to make mortgage or rent payments as the nation struggles to cope, according to consumer group Which?.
Data shows that around one in 20 renters and one in 30 mortgage holders defaulted on a payment.
The number of people missing essential household bill payments has also now returned to the same levels as winter.
Around 2.4 million households missed at least one bill payment in the month to mid-July, it estimates.
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