Martin Lewis issues ‘nightmare’ mortgage warning as he makes demand for renters

Martin Lewis has warned of a “nightmare year” ahead as people face increasing mortgage and rental costs.

The MoneySavingExpert.com founder said he expects to see rises in mortgage arrears and people selling up due to skyrocketing costs, adding that he is also “very worried” for renters.

The warning comes after a new mortgage charter was agreed by lenders representing around 85% of the mortgage market following a meeting between Chancellor Jeremy Hunt and banks last Friday (23 June).

Under the charter, lenders will allow customers who are up to date with their payments to switch to interest-only payments for six months or extend their mortgage term to reduce their monthly payments.

Meanwhile, borrowers will have the option to revert to their original term within six months by contacting their lender. A borrower will also not be forced to leave their home without their consent, unless in exceptional circumstances, in less than a year from their first missed payment.

Mr Lewis said he believes the agreements should prevent a big rise in home repossessions, but expects mortgage arrears to shoot up. Speaking on ITV’s Good Morning Britain, he said: “I think we’re going to see some very substantial arrears… I think we’re going to see people voluntarily getting rid of their homes.

“I’m very worried for renters out there that they’re not able to afford to pay what they need. And that we really do need to look at what’s going on in the renting situation.”

The consumer champion highlighted that inflation is causing prices to shoot up leaving the economy “teetering on the brink of recession”. He said: “It is a nightmare scenario. And it is very difficult for any politician to know what to do. Or me, or you.”

Figures released by Moneyfactscompare.co.uk this week showed that the average two-year fixed-rate homeowner mortgage rate on Tuesday morning (27 June) was 6.26%, edging up from an average rate of 6.23% on Monday. The average five-year fixed-rate homeowner mortgage on Tuesday morning was 5.87%, up from 5.86% on Monday.

Average fixed rates are still below the highs seen last autumn amid the market volatility which followed September’s mini-budget, with average two-year fixes hitting 6.65% on October 20 2022.

As for the renting market, Mr Lewis said it remains one of those “untapped, unsolved problems”, much of which has been caused by the knock-on effect of problems in the mortgage market.

He went on to demand that rules for renters be looked at as landlords’ buy-to-let mortgage rates are being pushed up “and they’re trying to pass on the cost to the person who’s renting”.

He explained: “I welcome the mortgage forbearance measures… it’s not going to help everyone, what I hope it will do is just allow some people to get over the hump. I think we need to look at renting, we need to look at the rules for renters because it’s going to be a very difficult period for renters too.”

The money-saving expert has been pushing for banks to pass on interest rate rises in saving rates, which could also help with inflation by encouraging people to put their money away. He added: “We need to focus on savers… and if we give savers better rates then we might not need to continue to push rates up as high.”

Asked what help struggling renters can get, Mr Lewis recommended seeking advice from rent advisers based at local councils and welfare centres. He said: “If you feel your rent is being put up in a way that is prohibitive and unfair, absolutely seek advice from a renting adviser, go talk to the local council, many councils will have renting officers, who can help with private rents.”

In a post shared later on Twitter, Mr Lewis responded to criticism over mortgages and rent rises, saying he won’t stay silent “to the plight millions are facing”. He wrote: “I said on @GMB (Good Morning Britain) today, in reference to new depressing stats on the numbers struggling to pay mortgages and rent, that it’s going to be a nightmare year for some.

“I’ve seen a few references here calling me a ‘prophet of doom’, the same attack phrase used by some last year when I was warning we needed energy intervention, again based on known facts of huge impending price hikes.”

He added: “To try to demonise a person explaining the situation and try and knock down anyone warning people to prepare seems a dangerous precedent… I hope I try and make positive practical suggestions. I won’t wear blinkers and a gag to the plight millions are facing.”