Chancellor Rachel Reeves has obtained pledges from Britain's six largest banks and building societies to proactively contact 1.6 million mortgage holders whose fixed-rate arrangements conclude before the end of 2026.
The initiative, announced yesterday, will see major lenders including Nationwide, NatWest and Barclays reach out to customers facing potentially higher monthly payments.
Each homeowner will receive bespoke assistance tailored to their individual circumstances, with options ranging from extending mortgage terms to reduce monthly outgoings to temporary payment holidays.
The Chancellor stated: "In uncertain times, people need clear reassurance and practical help. That's why I've brought the biggest lenders together to step up support."
The escalating conflict in the Middle East has driven mortgage costs sharply higher in recent weeks.
Average rates have climbed from 4.89 per cent at the start of March to 5.50 per cent by March 25, according to analysis by Moneyfactscompare.
For a typical borrower with a £250,000 loan over 25 years, this increase translates to an additional £1,075 annually.
Lenders have withdrawn hundreds of mortgage products since hostilities intensified, as swap rates - which determine fixed-rate mortgage pricing - surged amid concerns the Bank of England may raise interest rates in 2026 to tackle inflation.
Nationwide, Barclays and NatWest to contact millions of homeowners facing higher mortgage costs
| GETTY / NATIONWIDEApproximately 86 per cent of UK mortgages are currently on fixed-rate terms, Government figures indicate.
Under the Mortgage Charter, which the Treasury says major lenders are now reinforcing their commitment to, borrowers can secure a new fixed-rate deal up to six months before their current arrangement expires—and switch to a better offer if one becomes available afterwards.
Homeowners may also convert to interest-only payments for a six-month period or lengthen their mortgage term to bring down monthly costs.
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Approximately 86 per cent of UK mortgages are currently on fixed-rate terms, Government figures indicate
| GETTYCrucially, these measures can be accessed without undergoing a fresh affordability assessment, which might otherwise result in rejection, and taking up such options will not affect credit ratings.
Damien Burke, head of regulatory practice at banking consultancy Broadstone, described the Chancellor's intervention as "a positive step" that would help borrowers understand their options well in advance.
This prevents short-term payment difficulties from becoming longer-term financial problems.
The worst approach is inaction followed by missed payments, as early engagement unlocks the widest range of support
| GETTYNick Mendes, mortgage technical manager at broker John Charcol, urged homeowners to act before their lender contacts them, comparing deals six months ahead of their current arrangement ending.
"Work out what the payment looks like in pounds and pence, not just in headline rate terms," Mr Mendes advised.
He emphasised that the worst approach is inaction followed by missed payments, as early engagement unlocks the widest range of support.