The Financial Conduct Authority (FCA) have said that younger mortgage holders in the 18-34 age bracket are most likely to be under financial hardship at the moment. Their research also found that those living in London and the South East of England were feeling the effects of the cost of living crisis most deeply.
The FCA also estimates that 356,000 borrowers are at risk of falling behind on their mortgage repayments by the end of June 2024. This is less than the previous estimate of 570,000 that was made last September, due to the inflation rates falling slightly faster than expected.
The Bank of England governor Andrew Bailey signalled earlier this month that interest rate rises may have peaked at the current 4%, after 10 consecutive rises since December 2021. Inflation rates have also started to fall after peaking at 11.1% at the end of last year.
Despite the marginally brighter economic outlook and hope that a long recession can be avoided, the FCA has called on UK banks to reduce mortgage rates for those borrowers who are struggling the most to meet the monthly repayments. Some households will be facing an increase of £340 a month when their current mortgage deal ends.
Sheldon Mills, Executive Director of Consumers and Competition at the FCA, said: ‘Our research shows most people are keeping up with mortgage repayments, but some may face difficulties.’
‘If you’re struggling to pay your mortgage, or are worried you might, you don’t need to manage alone. Your lender has a range of tools available to help. Get in touch as soon as you have concerns, don’t wait until you’re about to miss a payment before doing so. Just talking to them about your options won’t affect your credit rating.’
The FCA is working with lenders, the government, and consumer representatives to help support mortgage holders and offer advice about managing finances. It has issued guidance to lenders on how to reduce pressure on borrowers and help them to continue to meet their monthly repayments.
THe FCA has set out options for customers who have missed payments or are worried about meeting repayments in the future. These include extending the mortgage term so that the loan is repaid over a longer period of time, thus reducing the monthly repayments, and also making reduced repayments for a temporary period.
However, these actions could result in the mortgage holder paying more in the long run, and changing the terms of a mortgage can also affect the credit score of the borrower. It is important to note that missing repayments will be the most severely damaging to a credit score and may affect the ability of the homeowner to remortgage.
If you are worried about getting a mortgage or remortgaging due to concerns about your financial history, it is important to seek advice from a professional who will understand what the best options for you may be. If you would like to talk to a mortgage broker for defaults, please contact us today.
Your home may be repossessed if you do not keep up with your mortgage repayments.
There may be a fee for mortgage advice. The actual amount you pay will depend on your circumstances. The fee is up to 1% but a typical fee is £595.
Back to Blog
Create Finance Limited is an appointed representative of Mortgage Advice Bureau (Derby) Limited which is authorised and regulated by the Financial Conduct Authority.
Create Finance Limited. Registered Office: 35 Friar Gate Studios, Ford Street, Derby, Derbyshire, England, DE1 1EE. Registered in England Number: 09582938.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. There may be a fee for mortgage advice. The actual amount you pay will depend on your circumstances. The fee is up to 1% but a typical fee is £595.
The guidance and/or advice contained within this website is subject to the UK regulatory regime, and is therefore targeted at consumers based in the UK. The actual rate available will depend upon your circumstances. Ask for a personalised illustration.
We may receive commission that will vary depending on the lender, product or permissible factors, The nature of any commission model will be confirmed to you before you proceed. Create Finance Ltd are a credit broker, not a lender.