London Thanasis Gavos

The morning meeting of their representatives with the Minister of Finance Jeremy Hunt resulted in an agreement on the part of the British banks to demonstrate greater flexibility in terms of repayment of housing loans.

The meeting closed amid what was described as a “crisis” in the mortgage market, with interest rates having soared in the Bank of England’s bid to reduce inflation and offers of new loans in the UK market being all but expensive and hard to come by.

Under the agreement, mortgage holders will be able to request a temporary change to the terms of the loan agreement. In this way they will be allowed to either extend the repayment period or have smaller installments for a period, repaying only the interest.

As Mr. Hunt stated, the use of this flexibility will not affect the creditworthiness of the borrower, as long as the arrangement does not exceed six months.

Banks also agreed to a 12-month freeze on home foreclosure proceedings in cases of default.

Analysts are talking about a “deepening crisis” in mortgages as already high interest rate rises are expected to get even bigger after yesterday’s decision by the central bank to raise the key rate for the 13th time in a row from 4.5% to 5% .