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The Financial Conduct Authority (FCA) has confirmed it will provide assistance to mortgage borrowers struggling to make payments.
The FCA will provide final guidelines for mortgages. Mortgage lenders outline how they can help customers who are concerned or already struggling with their mortgage payments due to rising costs of living.
The FCA also released new data and analysis on the mortgage market. This indicates that 356,000 mortgage borrowers could face payment problems by the end of June 2024, in addition to households already behind on payments.
This is 214,000 down from the FCA’s previous estimate of 570,000 borrowers last September due to changes in market expectations for the Bank of England’s base rate. A person in this group who rolls off a fixed rate deal could end up paying an additional £340 a month on average.
Sheldon Mills, FCA’s executive director of consumer and competitive divisions, said:
“If you’re struggling to pay your mortgage or worry you might be, you’re not alone. Lenders have a variety of tools to help. If you have, contact us immediately and don’t wait until you are about to be late on your payment to contact us.Merely discussing your options will not affect your credit rating.”
An FCA study found that borrowers between the ages of 18 and 34 are more likely to be financially disadvantaged than the rest of the working-age population. Those living in London and the South East are most likely to be stretched. Some people can use their savings, spend less, or earn more to meet their mortgage commitments.
Concerned borrowers can not only reach out to lenders for help, but they can also visit MoneyHelper to find helpful money tips, budgeting tools, and free expert debt advice.
Lender support for borrowers
FCA, major lenders and consumer representatives attended a mortgage summit hosted by the Prime Minister in December. Since then, FCA has been working with lenders to ensure they receive the support they need, including timely communication.
Lenders proactively reached out to customers and provided support a total of 16.5 million times across various channels last year. After talking with FCA, the lender confirmed that it plans to increase this to 20.5 million over the next year.
The lender has helped over 2 million customers manage their money in the past year. This includes budgeting tools, access to debt advice, individual mortgage forbearance, and more.
The FCA is also working with the Money and Pensions Service, consumer groups and lenders to raise awareness of the assistance available to mortgage borrowers worried about late payments.
FCA Guidance
The FCA hopes that businesses will help borrowers in financial difficulty. That final guidance sees how mortgage lenders can support customers who have missed payments or are worried they won’t be able to make payments in the future. It covers options such as extending the term of your mortgage or temporarily reducing your monthly payments.
Making changes, even temporary ones, can result in higher future monthly payments or a higher overall repayment amount. Mortgage borrowers should carefully consider what steps to take, and customers who can continue to pay should continue to do so.
This publication builds on the work FCA has already done to ensure that businesses treat their customers fairly and support those struggling financially due to the rising cost of living.
In line with its three-year strategy, regulators have previously asked companies about the standards they must meet to support borrowers in distress and where they need to better treat people in financial distress. I have called your attention. This follows swift steps taken by the FCA to protect borrowers during the pandemic, including the introduction of customized support guidance.
The FCA said it will continue to monitor the mortgage market and how businesses are supporting their customers.