Sadiq Khan has urged the Government to reinstate mortgage payment holidays to ease the financial burden on homeowners amid soaring inflation rates.
It comes following new survey data from City Hall which found that more than a quarter of London homeowners say they will struggle to make mortgage payments this winter as the cost of living crisis deepens.
Last month, the average rate for a two-year fixed-rate mortgage rose to 6.53 per cent – the highest since August 2008.
The Mayor of London has called on ministers to provide more support for homeowners, including by reintroducing mortgage payment holidays.
First introduced in March 2020 as the UK entered the first national lockdown of the Covid-19 pandemic, mortgage payment holidays allowed homeowners to temporarily reduce or defer mortgage payments without impacting on their credit scores.
Khan has also called for the reintroduction of the Mortgage Rescue Scheme which, prior to 2014, allowed households struggling with mortgage repayments to stay in their homes by selling them to social landlords and continuing to live there as tenants.
Khan said this would be the “right and proportionate approach” to tackling the ongoing crisis which “is only going to become more significant and dangerous”.
He said: “Many London homeowners already face sizable monthly mortgage payments, alongside rising costs and stagnant wages. With re-mortgaging rates now hitting levels not seen in more than a decade due to the economic chaos created by this government, it is essential that ministers act to ensure Londoners do not pay the price by losing their homes.
The Resolution Foundation estimates that London will be the area hit hardest by rising inflation, with average annual mortgage payments set to rise by more than £8,000 by 2024. There are an estimated 400,000 households in London facing mortgage renewals by that time.
Paula Higgins, chief executive of HomeOwners Alliance, said homeowners are facing a “gloomy winter” due to a combination of rising mortgage rates and the soaring cost of food and energy.
She said: “We need a government plan to support these households coming off fixed-term mortgages and this needs to be communicated sooner rather than later to reduce their financial anxiety.
“We support the mayor’s call for action and remind homeowners struggling with increased rates that they are not alone. Their first port of call should be to speak to their lender about options, such as extending the mortgage term to reduce monthly payments, reducing what you pay for a short period, mortgage holidays or changing temporarily to interest-only payments.”