Santander sees surge in calls to mortgage helplines after mini-budget

Calls from worried mortgage-holders surged by 30% in the week after the former chancellor’s mini budget, Santander has said.

The fiscal plan, which has been largely ripped up by new Chancellor Jeremy Hunt, triggered turmoil in the financial markets and average mortgage rates shot up.

The average five-year fixed-rate mortgage currently stands at 6.29%, its highest level since the 2008 financial crash.

On Monday, Mr Hunt reversed a swathe of policies in Kwasi Kwarteng’s economic plan which is hoped to have lessened the need for aggressive interest rate hikes by the Bank of England.

But the market turbulence has prompted an influx in homeowners reaching out to their lender over concerns about monthly payments and what will happen once their fixed-rate mortgage deal ends.

“Since the mini-budget we have seen much higher demand on our mortgage helplines,” Josie Clapham, Santander’s director of financial support, told the PA news agency.

“Ordinarily it is not the sort of calls that my team would answer. But after the mini-budget, essentially anyone with a mortgage phoned us on any helpline.

“People have been asking what they should do when their fixed-rate mortgage is due to expire, and what their early repayment fee could be.”

Santander said that its mortgage team saw a 40% surge in people overpaying on their mortgage in the week following the mini-budget in efforts to bring down their overall balance and monthly repayments.

Choosing to pay off a chunk of a mortgage to reduce total borrowing, or ending a mortgage deal before the date previously agreed with a person’s bank, can result in an early repayment charge.

But the UK’s fourth biggest lender stressed that there has only been a very slight increase in people falling behind on monthly payments.

“This year, it has all been about the cost of living and inflation squeeze on people’s income and budgets”, Ms Clapham told PA.

“That doesn’t mean that people speaking to us have missed payments, and we know that many customers were able to build up savings during the pandemic.

“But since the mini-budget, concerns have shifted away from energy bills and toward mortgages.

“People are used to sub-2% rates but suddenly, they are seeing rates of 4% or 5%, and they want to know what it means for them.”

It comes as many high-street banks have plugged more money and staff into financial support teams since the cost-of-living crisis.

Nationwide Building Society, which lent about £35 billion in total in 2021, said that it set up a cost-of-living hotline in August and has seen an increase in the number of calls in recent weeks.

NatWest announced last week that it had partnered with the UK’s biggest debt charity, StepChange, to support its small and medium business customers with debt advice.

The banking giant said it had donated £2 million to the charity to fund a dedicated team to help business customers struggling with their finances amid the rising cost of living.

Meanwhile, Santander has grown its financial support team to around 600 staff and invested in its website and chatbot function so people can access advice online before picking up the phone.

It has also pre-emptively reached out to around 1.6 million customers since April, as well as targeting students and small business customers.

There are signs that the home loans market could be steadying with the average two- and five-year fixed mortgage rates remaining static for four days in a row – between Friday and Monday.

However, the number of mortgage products on the market has dropped significantly since the mini-budget, with around 850 fewer deals available.