You are here: Home - Mortgages - Remortgage - News -

Regulator plans new review of interest-only mortgages

0
Written by:
18/04/2017
The regulator is to launch a thematic review into lender treatment of interest-only mortgage borrowers near term-end as part of its 2017/18 business plan.

Around 1.8 million UK home owners currently have outstanding interest-only mortgages, excluding buy-to-let, and many do not have an appropriate strategy to repay them, said the Financial Conduct Authority.

It said: “We will look at how firms treat borrowers whose interest-only mortgages are approaching maturity and their ability to ensure these customers are treated fairly. This will include those interest-only mortgages that are due to be repaid by 2020 – where borrowers have the least amount of time to find a solution.”

The number of borrowers reaching term-end on interest-only mortgages with no repayment vehicle is expected to peak at around 10,000 customers a year until 2020, according to Key Retirement, a financial planning firm.

Consumer research conducted by GFK and commissioned by the FCA, which reported in May 2013, suggested of those with a mortgage due for repayment up to and including 2022, 49% would have an average shortfall of £56,200.

Mixed-messages

The regulator’s messaging has been mixed on interest-only, from Martin Wheatley’s ticking time bomb assertion in 2012 to suggestions that the clamp down had led to a lack of interest-only products in 2013.

Lenders including Santander, Virgin Money, NatWest, Leeds BS and Scottish Widows have been among lenders relaxing interest-only criteria and seeking market share in recent years.

Dean Mirfin, technical director at Key Retirement, said of the 10,000 borrowers coming to term-end, 5,000 are expected to have no repayment vehicle at all.

Mirfin said: “It is essential, for this first wave of maturities, that banks and other lending institutions take action sooner than later, these customers are the most vulnerable as they have little time to act. We are engaging with a number of lenders to support their range of solutions but sadly not enough. We hope that the FCA’s announcement expedites that progress.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

The essential Your Money guide to the April 2018 tax changes

As we head into the 2018/19 tax year, a number of key changes take place to existing policies while some new i...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

YourMoney.com Awards 2018

Now in their 21st year, our awards recognise the companies offering the best products and services to consumers

Money Tips of the Week

Read previous post:
2265175-women-in-law
Female savers falling short of men

Men have almost three times as much as women in their pension pots, according to new research.

Close