Financial Conduct Authority publishes final guidance for firms on supporting mortgage borrowers

The UK’s Financial Conduct Authority (FCA) published, on 10 March, final guidance for mortgage lenders on the ways in which they can support existing customers who are worried or struggling with their mortgage payments due to the cost-of-living crisis.

Alongside the publication of the final guidance document, the FCA has also published its latest research on the UK mortgage market and the relevant macroeconomic developments, which includes revised estimates that an additional 356,000 borrowers could face difficulties repaying their mortgage by the end of June 2024.

The FCA’s research note, which is based on the latest mortgage product sales data, finds that borrowers aged between 18-34 are the most likely working age category to be financially stretched, as are those borrowers living in London and the South East. The FCA also presents the details of the recent work carried out by major lenders to support borrowers during the challenging economic environment, which includes proactively contacting customers 16.5 million times in 2022 to offer support.

Mortgage lenders are expected to adhere to certain standards when providing support to customers that are experiencing financial difficulties. The FCA’s finalised guidance provides details on the options open to mortgage lenders to support customers who have missed payments or who are worried that they may not be able to make payments in future. The options open to lenders include extending the term of the customer’s mortgage or agreeing on reduced monthly payments for a temporary period.

Sheldon Mills, Executive Director of Consumers and Competition at the FCA, said: “Our research shows most people are keeping up with mortgage repayments, but some may face difficulties. If you’re struggling to pay your mortgage, or are worried you might, you don’t need to manage alone. Your lender has a range of tools available to help. Get in touch as soon as you have concerns, don’t wait until you’re about to miss a payment before doing so. Just talking to them about your options won’t affect your credit rating.”