Mortgage lenders ‘struggle to contact IOM borrowers’

Mortgage lenders ‘struggle to contact IOM borrowers’

Mortgage lenders appear to have hit a stumbling block in their attempts to contact interest-only borrowers, figures from the CML have suggested.

Data from the trade body showed response rates among those who have been contacted by their borrower is only 10 per cent this year.

Lenders have been attempting to contact those borrowers whose interest-only mortgages mature before 2020 to make sure they have the means to pay off their debts.

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But a statement from the CML said: “Getting borrowers to engage is still a challenge. Last year we reported that some 28 per cent of pre-2020 borrowers responded to contact from their lender.

“Response rates varied this year – an overall response rate of 10 per cent may reflect the fact that lenders have been contacting borrowers whose mortgages mature well into the future.

“It is possible that these borrowers, given that they have many years left to run on their mortgages, may feel less need to engage at this early stage.”

Last month, research by the Citizens Advice Bureau among more 2,137 UK adults suggested that up to 1m mortgage holders could face repossession because they had no known way of paying off their loans.

But the FCA has said it would only take action if it felt that consumers were being treated unfairly – something it does not think is the case, since lenders have been showing forebearance.

Despite the problems engaging with borrowers, the CML has said of those who have been in touch with their lender, 86 per cent said they had a repayment strategy in place.

The CML also reported that the total number of interest-only loans outstanding has fallen by more than a quarter.

Adviser view

Jane King, mortgage adviser with London-based Ash Ridge Private Finance, said: “I have dealt with a few people who have got less than five years to go on their interest-only mortgages, and we have looked at extending the terms, but I am getting absolutely no co-operation from lenders.”