10 March 2023
If you are covering the FCA’s final guidance on help for mortgage borrowers struggling with payments, please see the following comment from Charlotte Nixon, mortgage expert at Quilter:
"The FCA has this morning set out its final guidance to lenders on how best to help customers who are struggling with their mortgage payments as a result of the difficult economic climate we find ourselves in.
"However, the release also contained a sliver of good news that the FCA’s previous grim forecasts may not come to bear. New data published by the regulator shows that, in addition to the households already behind on payments, 356,000 mortgage borrowers could face payment difficulties by the end of June 2024. While a worrying statistic, this is down 214,000 from the 570,000 borrowers the FCA previously estimated in September last year due to changes in market expectations of the Bank of England base rate. However, a slightly rosier forecast should not be misconstrued as a signal that we are out of the woods. Millions of people will still face hardship because of their mortgage bills and many others will fall behind putting them in a dangerous financial situation.
"However, the FCA has revealed a suite of guidance for lenders with customers that are struggling to keep up with payments. This is largely around offering customers forbearance options. Forbearance refers to a temporary agreement between a lender and a borrower in which the lender allows the borrower to temporarily reduce or pause their payments on a loan. Forbearance may be granted for various reasons such as financial hardship, illness, or other unexpected circumstances that may prevent the borrower from making their regular loan payments. This might include putting a customer on an interest only mortgage for a period of time to reduce their monthly payments.
"If you are a borrower experiencing financial difficulties due to the rising cost of living, it's important to contact your lender and discuss your situation with them. The lender may be able to offer you a variety of options to help you manage any payment shortfalls that may arise.
"It's also important to keep in mind that while forbearance may provide temporary relief, it may also have long-term implications on your credit score and the total amount you'll end up paying on your loan. Make sure to fully understand the terms and implications of any forbearance arrangement before agreeing to it and if unsure talk to a mortgage adviser as they can fully assess your needs and review your wider options."
