In a bid to ease the financial pressure on UK mortgage holders after the Bank of England raised the interest rate to 5% yesterday, Chancellor of the Exchequer Jeremy Hunt announced a 12-month grace period before repossessions can start. This means that people who are unable to meet their mortgage payments due to the rate hike will have more time to negotiate with their lenders and find alternative solutions.

Hunt said that he had reached an agreement with the major mortgage lenders, including Lloyds, NatWest, Barclays, and Virgin Money, to offer this grace period to their customers. He also said that people who temporarily change the terms of their mortgage, such as extending the repayment period or switching to interest-only plans, will not have their credit scores affected as long as they reverse the changes within six months.

The chancellor said that this was a “fair and sensible” way to support households who are facing higher costs due to inflation and the pandemic. He added that the government was also working on other measures to help people with their living expenses, such as cutting taxes and increasing wages.

However, Hunt’s announcement did not address the situation of renters, who are also facing rising rents and a shortage of affordable housing. Critics have accused the government of neglecting the needs of tenants and favoring homeowners. The Labour leader, Keir Starmer, said that Hunt’s measures were “a sticking plaster for a gushing wound” and called for more action to tackle the root causes of inflation and inequality.