Writing in its monthly newsletter, the CML stated: “Lenders are concerned by any signs of an increase in ‘debt denial’ by borrowers who fail to acknowledge that they have a problem in repaying their mortgage and leave it too late to seek help.”
The lender trade body said lenders were worried despite there being a wide range of options for those who confront payment problems at the earliest opportunity.
It said: “Lenders will respond sympathetically and try to devise a solution to help the borrower get back on track.”
The CML’s comments followed increasing speculation that interest rates are likely to rise sooner than expected after the Bank of England monetary policy committee meeting minutes revealed members were more hawkish than earlier in the year.
The CML added: “At some stage borrowers will have to adjust to higher costs, although the Bank wants the transition to be gradual.
“Despite pressure on household finances, most borrowers are able to prioritise their mortgage commitments, by flexing their budgets if necessary and cutting back on discretionary spending.”
Lender reaction round-up
A spokesman for Santander said: “Customers in financial difficulty are a particular concern. When dealing with these customers internally we look to support and help them resolve their debt issues by understanding their individual circumstances and tailoring a solution to match.”
A Halifax spokesman said: “It’s important that we can establish dialogue with borrowers very early on to discuss tailored individual options including repayment plans, term extensions and options to temporarily reduce repayments.”
A spokesman for Virgin Money said: “We pride ourselves on our responsible lending practice which is based around affordability for the customer, and our assessment criteria are robust. Although arrears levels are very low, we remain committed to assisting all customers should they face financial difficulty wherever possible.”
Mike Lawton, managing director of Bristol-based Which? Mortgage Advisers, said: “It is difficult to know how widespread debt denial is – if clients are ignoring potential problems repaying their mortgage, the likelihood is they aren’t seeking help. But if this is happening more, it is an issue. We would advise all clients to engage with their lender as soon as possible and seek advice.”