Lenders must do more for 'vulnerable' borrowers

Lenders must do more for 'vulnerable' borrowers
Photo: Antoni Shkraba via Pexels

Britain's mortgage lenders must take the lead in doing something to help the "greater good" of borrowers, mortgage specialists have said. 

Speaking as the latest Office for National Statistics revealed a slight drop in CPI for August, Richard Pike, chief sales and marketing officer software company Phoebus said lenders should do more to "alleviate" the increase in inflation.

As reported by FTAdviser, the ONS figures showed headline CPI at 9.9 per cent, down from a 40-year high of 10.1 per cent in July because of fuel prices falling from record highs.

But economists believe double-digit CPI (and even higher RPI) are still on the cards well into 2023. 

Pike said: "Even though we are seeing the cost of fuel coming down on forecourts across the country, everything else is becoming more expensive.

"We expect that the Bank of England will increase interest rates again next week, but it is difficult to see how, at this rate, it can do anything to alleviate increasing inflation.

"So for borrowers this is a time to take stock, as interest rates rise lenders will be forced into increasing mortgage rates."

The average mortgage rate has now passed 4 per cent as lenders pull their products, reprice and put new rates onto the market at record speed. 

Pike said this is putting more pressure on households, of which lenders should be mindful. 

He said: "The figures on arrears from the Bank of England yesterday (September 12) showed that the value of mortgages in arrears fell in the second quarter, which is something of a false positive.

"For lenders there are sure to be a number of vulnerable borrowers that are already starting to worry and will need to know where they can get the help they need, before things get too late.

"The onus of responsibility is with lenders now to ensure that vulnerable clients get that help.”

Energy solutions

Ross Boyd, founder of the always-on mortgage comparison platform,, agreed. He said: "Soaring energy bills are something the UK’s mortgage lenders have the chance to address head on.

"Lenders can be part of the solution to this unprecedented crisis and the issue of energy longer term."

According to Boyd, because there is a "significant energy efficiency deficit" for 75 per cent of residential properties, with borrowing capacity available for property owners, the industry needs to "start embedding energy-efficiency measures into people's mortgages where applicable".

Boyd explained: "It's in the interest of both the homeowner who will pay cheaper bills and the lender, as energy-efficient homes will retain value and also mean borrowers are less likely to default due to astronomical energy prices.

"Now is the time for the mortgage industry to go green in earnest rather than continue along the current path of largely token green products."