FCA: Lenders to contact interest-only borrowers
The FCA’s research into interest-only found that many people should be in a good position to repay their mortgage when it is due for repayment.
Martin Wheatley, chief executive of the FCA, said:“By acting now we are aiming to nip this problem in the bud.
“Mortgage lenders have volunteered to contact their most at-risk customers with a ‘wake-up call’ to highlight the report’s findings and what they need to do without delay.
“We welcome this move and also the sector’s commitment to helping its customers try and find a solution – but people must engage with them.
“My advice to borrowers is to not bury your head in the sand – take action now. Understand the terms of your mortgage agreement and take control, work out if you can repay the outstanding amount when your mortgage matures. But you must engage with your lender to discuss how you propose to repay the outstanding loan.
“This is a landmark piece of work and it comes at a critical time: lenders, regulators, and borrowers need to ensure that they grasp the nettle now before it is too late.”
The FCA said this type of pre-emptive work is indicative of the way it will act in the future as it endeavours to spot potential problem areas and prevent them from developing into bigger issues.
The regulator said that by acting now, together with the mortgage sector, it is aiming to prevent interest only borrowers defaulting on their loans in the future.
In a statement the regulator said: “The FCA believes that with careful planning, consideration and engagement with their lender, many interest only borrowers – even those with loans maturing by 2020 – should be able to find a viable way to pay off their mortgage if they take control now.”
The FCA will be monitoring progress closely and providing further assistance to firms where needed.