MoneySavingExpert founder Martin Lewis has called for a mortgage emergency plan by Christmas to avoid the explosion of a home loans “ticking time bomb” next spring.

The journalist and businessman said the Treasury, the Financial Conduct Authority and the Bank of England must come up with a mortgage bailout package by the end of the year to avoid home loans “becoming the centre of the cost-of-living crisis”, he told ITV’s Good Morning Britain today.  

He said that the trio should put together a package of relaxed affordability tests, mortgage holidays and greater bank forbearance on arrears for homeowners in trouble.  

Lewis says homeowners faced pressure on three fronts over mortgage payments.  

He says: “I’m worried there’s a ticking time bomb on mortgages.   

“Interest rates have already gone up highly on mortgages and there are predictions they may go up even further. Costs for people coming off their fix have already risen, typically, by many hundreds of pounds a month.”   

He is also “concerned” that many people will fail stress affordability tests, which would restrict them to the lenders they are already with, or throw them onto more expensive standard variable rates.  

Finally, he is worried about “talk about a correction in the housing market”  

He said falling house prices will mean higher property loan-to-values for homeowners, which will also mean that it will be more difficult to get a mortgage.  

“These elements, in combination, are a ticking time bomb”, says Lewis.