The Chancellor Jeremy Hunt has said he has agreed with banks measures to help cool the mortgage crisis.

On Friday morning Hunt met with the bosses of HSBC, Santander and Barclays along with others following the shock hike in interest rates on Thursday.

The Chancellor said the banks have agreed to provide more flexibility to those who are “anxious” about their financial situation.

Hunt said, “That, I think, is going to give people a lot of comfort and stop people worrying about having conversations with their banks when they are worried about their financial situation.”

“The last thing that they want to do is to repossess a home, but in that extreme situation they have agreed there will be a minimum 12-month period before there’s a repossession without consent.”

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UK newswire, Newspage, asked brokers for their views and Mathew Jackson, director at Mint FS said that this is “like using a water pistol to put out a fire.”

Jackson said, “This is like using a water pistol to put out a fire. Utterly pointless. It will not do a thing to help, as lenders will set the criteria themselves to allow the client to move to interest-only and then amend future payments to catch up the shortfall.

“And to top it all off, although it will not be registered as mortgage arrears, it will be seen by lenders in the future making it harder to obtain finance.

“Which means no one will want to do it. If Carlsberg did pointless meetings….”

Hannah Bashford, director at Model Financial Solutions said, “This will be welcome news for some people who are worried about affordability coming off of a low rate onto something much higher. However, this is only a short-term solution because people’s debt remains and interest rates may remain high.

“In that sense, it is more of a sticking plaster, not a cure. Ultimately this is kicking the problem down the road and should not be seen as an easy option to increase disposable income as the debt will remain and people still need a plan to pay it off.

“Speaking to an adviser before you get into difficulty is key to long-term financial security.”

Justin Moy, managing director at EHF Mortgages said, “This is probably the best we will get from lenders and the government, and will undoubtedly help many worried mortgage holders.

“The cost is still with the homeowner, but at least the important part is trying to afford the monthly cost at this time. We need clear instructions from lenders about the mortgage adviser’s role in all this.

“For example, are we going to be able to swap to interest-only or lengthen mortgage terms at the same time as rate switching? With around 80% of all mortgages taken through a mortgage broker, I hope we have good involvement in this, for the sake of our clients.”