Financial regulator warns that more than 350,000 mortgage borrowers could face payment difficulties
The financial regulator (Financial Conduct Authority FCA) has issued a warning. According to the FCA, over 356,000 borrowers could face mortgage repayment problems by June 2024. There are already significant numbers of households that are experiencing mortgage difficulties according to reports from the FCA.
Who is likely to experience difficulties with mortgage repayments?
It is suggested that the groups to be worst affected will be those living in London and the South East. Those aged between 18 to 34 living in this area will feel the impact most. These are the people that typically are the most financially stretched. They will typically have less savings or surplus to pay for things in times of financial difficulty.
Why are so many households expected to be in this situation?
There are a number of economic factors that will play a part in why so many people might experience mortgage repayment difficulties in the next 12 months. The biggest contributing factor is the large scale increases in mortgage interest rates. These interest rate increases are due to the Bank of England’s hike in the base rate to 4.0%.
Most borrowers will have been used to far lower interest rates over the past 15 years. Rates have been far lower since the mortgage crash in 2007. Interest rates have remained low for the past 10 years. We have become used to fixed rate mortgage deals of around 2-3%, which is no longer the case.
The cost of living crisis and the astronomical energy bill costs in the UK, will contribute to significant mortgage repayment problems for many of us.
What to do to prevent mortgage repayment problems
If you think that you are likely to experience problems with your mortgage repayments over the next 12 months, there are steps you can take to prevent or reduce this issue.
You should remember that missing your mortgage repayments can have a serious impact on your credit score. It will also have a major impact on your ability to borrow again. Mortgage lenders are very cautious about lending money to anyone who has missed any mortgage payments within the past 12 months.
Here are 5 tips to help you:
1. Try to save now before it becomes a problem
5. Reduce your outgoings as much as possible to prevent problems and save money
What to do if you can’t afford to make repayments on your mortgage?
The FCA has recently confirmed that it will provide support to mortgage borrowers in financial difficulty due to the current cost of living crisis.
In preparation for the impending issues that are expected to happen, the FCA has issued guidance to mortgage lenders. This guidance provides some detail about how lenders can support their customers who are experiencing problems. It can also be used to advise those worried about struggling to meet their repayments.
Sheldon Mills, Exectutive Director of Consumers and Competition at the FCA, has urged mortgage borrowers to get in touch with their mortgage lenders as soon as they can if they are struggling to pay their mortgage or have concerns about it.
Mr Mills also emphasised the fact that mortgage lenders already have a number of measures and tools at their disposal to help borrowers.
If you need help then you should contact your lender immediately and find out what they can do to support you.