FCA issues guidance to support struggling mortgage borrowers

Regulator urges worried customers to talk to their lenders

FCA issues guidance to support struggling mortgage borrowers

The Financial Conduct Authority (FCA) has published final guidance for mortgage lenders to help customers worried about or already struggling with their mortgage payments due to the rising cost-of-living.

The regulator has also released new data and analysis on the mortgage market, showing that, in addition to the households already behind on payments, 356,000 mortgage borrowers could face payment difficulties by the end of June 2024.

This number is down 214,000 from the 570,000 borrowers the FCA previously estimated in September last year due to changes in market expectations on the Bank of England base rate.  Among this group, those rolling off a fixed rate deal could end up paying an additional £340 a month on average.

“Our research shows most people are keeping up with mortgage repayments, but some may face difficulties,” Sheldon Mills (pictured), executive director of consumers and competition at the Financial Conduct Authority, said.

“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’s research also found that borrowers aged 18 to 34 are more likely to be financially stretched than the rest of the working age population. Those living in London and the South East are most likely to be stretched, which does not necessarily mean they will miss payments, as some will be able to use savings, reduce spending, or increase incomes to help meet their mortgage commitments.

As well as contacting their lender for support, the FCA said worried borrowers can also visit MoneyHelper for financial tips, budgeting tools, and free, expert debt advice.   

Some lenders are already proactively supporting borrowers

The FCA, major lenders, and consumer representatives attended a mortgage summit hosted by the Chancellor in December. The trade body said that, since then, it has continued to work with lenders to make sure borrowers get the support they need, including timely communication.

It was reported that lenders proactively contacted customers a combined total of 16.5 million times, across a range of channels, to offer support in the last year. Following discussions with the FCA, lenders have confirmed they expect to increase this to 20.5 million contacts over the next year.

Lenders also reportedly supported over two million customers to manage their finances in the past year, including through budgeting tools, access to debt advice, and tailored mortgage forbearance.

The FCA is also working with the Money and Pensions Service, consumer groups, and lenders to raise awareness of the help available to mortgage borrowers worried about keeping up with payments.

FCA continues efforts to make sure firms support their customers

The regulator said it expects firms to support borrowers in financial difficulty, and the final guidance confirms how mortgage lenders can support customers, who have missed payments or are worried they may not be able to make payments in future.

The guidance covers options such as extending the term of their mortgage or making reduced monthly payments for a temporary period. 

Today’s publications build on work the FCA has already done to make sure firms treat customers fairly and support those struggling financially due to the rising cost-of-living. In line with its three-year strategy, the regulator has also previously reminded firms of the standards that they should meet to support struggling borrowers and where they need to improve their treatment of those in financial difficulty.

The FCA said it will continue to monitor the mortgage market and how firms are supporting their customers.

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