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356,000 more borrowers could face payment difficulties
The regulator has published new guidance to lenders, setting out how they should be helping customers struggling to pay their mortgage
A significant 356,000 more mortgage borrowers could face payment difficulties by the end of June 2024, said the Financial Conduct Authority.
The regulator added that this is in addition to those households already behind on their mortgage payments.
It added that some of those rolling off a fixed rate deal could end up paying an additional £340 a month on average.
Most vulnerable groups
The FCA found that borrowers aged 18-34 are more likely to be financially stretched than the rest of the working age population.
Geographically, those living in London and the South East are most likely to be stretched.
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.”
Myron Jobson, senior personal finance analyst, interactive investor, added: “The FCA’s figures suggest that the financial resilience of hundreds of thousands of homeowners is set to be knocked off kilter because of the recent rise in mortgage rates.
“Housing costs are going through the roof and are set to become even more expensive for many Britons in the coming months. Official figures show that 57% of more than 1.4 million fixed rate mortgages due to mature this year were fixed at interest rates below 2%.
“To put this into context, the typical five-year fixed deal is now below 5% according to moneyfactscompare.co.uk, meaning that many of those approaching the end of their fixed term deal could face paying hundreds of pounds more in monthly costs at a time when many can least afford to.”
How lenders should support borrowers
The regulator has published new guidance for lenders, setting out the ways they should help customers worried about or already struggling with their mortgage payments because of the rising cost of living.
It covers options such as extending the term of their mortgage or making reduced monthly payments for a temporary period.
The regulator noted that making changes, even temporary ones, may result in higher monthly payments in future or paying back more overall. It said that mortgage borrowers should consider carefully any steps they take and customers who can keep up with their payments should continue to do so.
Jobson said: “Any support for struggling homeowners is welcome. The FCA’s guidance to lenders is not too dissimilar to that imposed during the height of the pandemic when many homeowners who experienced a loss of income needed to take a payment break. Those struggling to make mortgage payments should contact their lender as their first port of call.”