In the first few weeks of March, the Financial Conduct Authority (FCA) announced additional support for mortgage borrowers who are struggling to make their payments. Here is what they have released and how you can benefit from this.
Why has the FCA announced new support?
First published on March 10th of this year, the FCA has announced guidance for mortgage lenders, setting out how lenders can support mortgage borrowers who cannot meet their payments or who are worried about struggling in the future, due to the rising cost of living.
In their recent study, the FCA found that in addition to those already struggling to make their payments, a further 356,000 borrowers could face issues up to July 2024, due to the cost of living.
What mortgage support has been announced?
The key mortgage support being recommended by the FCA is offering reduced monthly payments for a short period of time. In order to offer this, the FCA suggests that mortgage lenders extend the term of the borrower’s mortgage to facilitate the reduced payments.
Although these options may help greatly in the short term, borrowers and lenders alike are being warned of the longer-term implications this may have on the repayments. Any changes made to the repayment plan, albeit temporary, could mean higher payments need to be made in the future or the borrower will end up paying back more overall.
In a press release, the FCA stated that:
“Mortgage borrowers should consider carefully any steps they take and customers who can keep up with their payments should continue to do so.”
Other forms of help the lenders should offer is communication with their borrowers. Last year, lenders contacted struggling borrowers a combined total of 16.5 million times. This is now expected to jump to 20.5 million times.
In addition, over the past year, mortgage lenders have offered financial support to over 2 million borrowers. This included budgeting tools and tailored mortgage forbearance. This support is set to continue, alongside further work that the FCA is conducting with consumer help groups such as the Money and Pensions Service.
Help with your mortgage repayments
If you are struggling to make your mortgage payments due to the cost-of-living crisis, we can help. Our dedicated Mortgage Guide includes everything you need to know about how a mortgage is set up, how much they may cost you and how to get help with missed payments.
If you are already behind on payments and are in arrears, use our Free Debt Advice Tool online and find out what debt support you are eligible for in a matter of minutes.