With renegotiation of 1.6 million mortgages forecast by the end of 2024, nearly half a million mortgage-holders could miss payments within the next six months, according to data from mortgage platform Eligible.
This projection coincides with recent moves by major UK lenders like Nationwide, Santander, and Natwest, who have raised the costs of their fixed-rate products in response to lingering doubts about an early interest rate cut by the Bank of England.
The gravity of this situation is compounded by Eligible’s data, which reveals that an additional 670,000 mortgage holders have already missed payments over the past year. Against the backdrop of rising living costs and energy bills, 5.4 million Britons have cited their mortgages as a significant source of financial stress.
Eligible highlights communication as a pivotal factor exacerbating the impending mortgage-payment crisis. Research conducted by the company indicates that 1.3 million Britons struggle to comprehend the terms of their mortgage due to inadequate communication with their lenders.
Zahra Hassan, co-founder of Eligible, underscored the challenge posed by infrequent mortgage interactions, stating, “The fundamental problem is that mortgages are a financial product that customers take out only once every 3-5 years. This means that they aren’t regularly engaging with their mortgage and aren’t in the loop of what all their options are.”
Hassan emphasised the critical role of proactive and tailored communication from banks, especially in light of the Financial Conduct Authority’s (FCA) Consumer Duty, which mandates financial service providers to ensure ‘good outcomes’ for consumers through proactive communication.
“The key factor that pushes someone from financial strain to actual default is their lack of awareness about the array of options that their bank could have offered to temporarily ease their financial burden, particularly on their largest financial obligation – their mortgage,” Hassan explained.
Eligible advocates leveraging technology, including machine learning programs, to identify at-risk customers and deliver personalised support. This approach aims to bridge the gap in understanding between lenders and borrowers, helping borrowers navigate their financial obligations more effectively.
