ISLANDERS could be protected from having their homes repossessed for 12 months after missing a mortgage payment, if States Members agree.
Reform Jersey Deputy Geoff Southern is calling for Chief Minister Kristina Moore – in consultation with Treasury Minister Ian Gorst – to engage with local mortgage and credit providers to support consumers who are struggling to make repayments.
His proposal follows an agreement reached on Friday between UK Chancellor Jeremy Hunt and Britain’s biggest lenders to give struggling homeowners a 12-month grace period if they fell behind on mortgage payments. The meeting was held the day after the Bank of England raised interest rates to 5% – the 13th consective rise – leaving those coming off fixed rates facing a sharp increase in their monthly repayments.
In his proposition, Deputy Southern said borrowers should be allowed to reduce their monthly bill either by extending their mortgage term or switching to interest-only repayments.
‘In the UK there are some 2.4 million fixed-rate homeowner mortgage deals due to expire by the end of 2024 and with average two-year deals now above 6% many could see their interest rate triple over the coming months,’ he wrote in his accompanying report.
Deputy Southern continued: ‘Analysis by the Public First consultancy found that the impact of mortgages could be far in excess of the surge in energy bills for certain households. Those with typical-sized mortgages in London and the home counties, could easily see their mortgage rise by £5,000 or more per year compared to 2020-2021 when many will have last fixed their rate.
‘These sorts of figures will clearly apply to house prices in Jersey and will be most marked amongst those under the age of 45 whose interest payments are a higher proportion of their mortgage, and indeed of their living expenses. Whilst the government can do nothing about the Bank of England’s base rate, it can and should do what it can to mitigate the short-term local hardship that may ensue.’
The proposition could be debated at the States Assembly’s upcoming sitting on 18 July.
