LONDON (Reuters) – Britain’s financial watchdog said on Friday it expects the number of mortgage borrowers struggling to keep up with payments to rise at a much slower pace in the next 12 months than previously forecast because interest rate hikes will be more modest.
The Financial Conduct Authority (FCA) said that in addition to households already behind on payments, 356,000 mortgage borrowers could face payment difficulties by the end of June 2024, but that is far fewer than a previous FCA estimate of 570,000.
Those rolling off a fixed rate mortgage deal could end up paying an additional 340 pounds ($404.84) a month on average, the FCA said.
The slower increase in numbers is due to markets expecting the Bank of England not to raise interest rates as high as previously expected, the FCA said. Easing energy prices and a resilient jobs market are also helping.
About 200,00 borrowers had a payment shortfall as of June 2022.
The FCA has been putting pressure on banks to help customers, and lenders proactively contacted customers a total of 16.5 million times in 2022, with this set to increase to 20.5 million over the next year, it said.
Nikhil Rathi, FCA chief executive, told parliament on Wednesday that the watchdog had intervened in over 30 firms that had not treated borrowers in difficulty fairly.
“The leadership of banks understand their reputations are at stake if they don’t handle things appropriately in coming months,” Rathi said.
The FCA also published final guidance to banks on helping customers in difficulties, including options such as extending the term of a mortgage or making reduced monthly payments for a temporary period.
($1 = 0.8398 pounds)
Get The App
Join the millions of people who stay on top of global financial markets with Investing.com.
Download Now
