In response to the Financial Conduct Authority (FCA) review of interest-only mortgages,
Which? executive director Richard Lloyd said:
“It’s alarming that nearly half of those with interest-only mortgages set to mature before 2020 are likely to have a shortfall, with a third of these shortfalls expected to be over £50,000.
“With nearly half of people worried about mortgage rates and a third expecting their finances to get worse in the next year, it’s right that the Financial Conduct Authority ensures every lender proactively deals with this before it escalates into a bigger problem.
“Lenders should recognise their responsibility, communicate clearly with their customers and explain all the options available to help them. It’s essential that customers trapped on their current mortgage are treated fairly, and lenders must show forbearance to people who are struggling financially.
“We urge anyone who is facing a shortfall to speak to their lender in the first instance. People should seek free debt advice if they are struggling, or speak to an independent mortgage adviser to help them switch to another mortgage deal.”
Notes to editors:
The Which? Consumer Insight tracker has been monitoring the well-being of consumers for the last year. Its most recent findings, published last week in the latest Which? Quarterly Consumer Report found:
– 46% of people are worried about mortgage rates
– 34% are worried about the price of their house falling
– 21% are worried about having their house repossessed
– 49% are worried about the level of household savings and investments
– 37% of people expect their finances to get worse in the next year
– 43% would find it difficult to cope with an unexpected expense
– 19% are dipping into their savings to fund day-to-day expenditure
Which? Mortgage Advisers offer independent, impartial mortgage advice looking at every mortgage from every available lender. For more information visit: http://www.whichmortgageadvisers.co.uk/
Which? wants to see:
- Clear information from lenders outlining all options available to their customers.
- Borrowers should be able to switch from an interest-only mortgage to a repayment deal without being charged early repayment fees, if they pass affordability tests.
- The FCA should include cash Isas as an acceptable repayment vehicle, so that consumers are not pushed towards riskier investment products.
- The FCA should require banks to request evidence on a regular basis that a suitable repayment plan is in place.