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<p>The Government does not set mortgage or interest rates. The Bank Rate - which is
one factor that lenders use to set mortgage and retail interest rates - is set by
the Monetary Policy Committee (MPC) of the Bank of England, which is independent of
Government. Commercial Banks and Building Societies also make other commercial judgements
that influence the degree of pass‐through from changes in Bank Rate into mortgage
and retail interest rates. The Government does not seek to intervene in these commercial
decisions.</p><p> </p><p>However, we recognise this will be a concerning time for
mortgage holders, particularly those who are due to come to the end of their existing
deal in the immediate future. The Prime Minister has been clear, the best and most
important way that we can keep costs and interest rates down for people is to halve
inflation, and then return it to the 2% target.</p><p> </p><p>On Friday 23 June the
Chancellor met with mortgage lenders, UK Finance and the FCA to discuss a new package
of support for those who encounter problems keeping up with their mortgage payments.
These commitments include an agreement permitting customers to switch to an interest
only mortgage, or extend their mortgage term, for 6 months, after which they can switch
back without a new affordability check or it affecting their credit score. Lenders
also agreed borrowers won’t have their home repossessed within 12 months from a first
missed payment without their consent or unless in exceptional circumstances.</p><p>
</p><p>If mortgage holders are concerned about making their mortgage repayment, they
must speak to their lender as soon as possible. Contacting them will not affect their
credit score.</p><p> </p><p>The Government has also already taken a number of measures
aimed at helping people to avoid repossession, including Support for Mortgage Interest
(SMI) loans for those in receipt of an income-related benefit, and protection in the
courts through the Pre-Action Protocol, which makes it clear that repossession must
always be the last resort for lenders.</p><p> </p>
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