PS23/8: Mortgage Charter: enabling provisions

In view of the announcement of a new Mortgage Charter by the HM Treasury (please see EventID 21843 in this context for more information), the Financial Conduct Authority has now published a Policy Statement (PS23/8) to implement some necessary changes to the Mortgages and Home Finance: Conduct of Business sourcebook (MCOB). Specifically, the FCA is revising MCOB 11.6 to permit lenders to allow customers who are up-to-date with their mortgage payments to switch to interest-only payments for six months or extend their mortgage term to reduce monthly payments without having to perform another affordability check on such clients. Furthermore, the rule change permits lenders and customers to revert to the original terms of the loan arrangements within six months, if so desired.
To recall, the Mortgage Charter was developed by financial market participants, industry associations, and regulatory authorities to support residential mortgage borrowers who are or will be affected by high interest rates in their loan arrangements due to the currently high inflation rate. It may be viewed as a form of a „Code of Conduct“ which includes a set of standards participating institutions (banks, building societies, other mortgage lenders) have committed to comply with to aid borrowers deal with potential issues in their home mortgage loans.