Key Retirement’s Dean Mirfin has backed the Financial Conduct Authority’s move to review lenders with interest-only customers.
Equity release is one option for customers with expiring interest-only mortgages, as Santander is already signposting customers to Legal & General for advice.
But Mirfin, who is technical director at the later life adviser, reckoned lenders need to develop more solutions and the FCA’s promise could hasten the process.
Mirfin said: “There are some good examples now of lenders making positive efforts to support and signpost their maturing interest-only customers who they otherwise cannot help.
“Where lenders have no solution to offer they must have a duty of care to customers of letting them know all their options, be that mortgage or equity release solutions from the wider market.
“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.”
In the FCA’s business plan published yesterday, the regulator identified 1.8 million homeowners with outstanding interest-only mortgages, excluding buy-to-let.
The FCA said: “Many do not have an appropriate strategy to repay them.
“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.”