Emma RadmoreFCA is working with an Industry Working Group of 12 mortgage lenders and administrators on a review of FCA’s current guidance on interest-only mortgages. There were under 1 million interest-only and part-and-part mortgages at the end of 2022, which represented a faster than expected decline in the numbers from 2015, when there were 2 million. FCA says this indicates that borrowers may have had better than expected repayment strategies or else have switched to repayment mortgages. That said, there are still interest-only borrowers who are facing challenges.
FCA and the Working Group have agreed terms of reference for the project and will now begin the review of the guidance and will also look at customer engagement strategies and ways lenders can support customers. Of course, the work will consider the Consumer Duty as well as past experience and research findings. All agreed that successful, early engagement gave borrowers the scope to consider a wide range of repayment options.