Lenders set out ways to help vulnerable borrowers

Lenders set out ways to help vulnerable borrowers
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Mortgage lenders have been highlighting steps they are taking to help borrowers who are in difficulty thanks to the rising cost of living. 

HSBC and Santander have set out the ways they are working with vulnerable borrowers and brokers to create appropriate measures of support as Britain heads into a winter of financial discontent. 

These include working with debt charities, proactively contacting customers identified as vulnerable, extending the timeframe during which consumers can move to a new rate and providing financial guidance online. 

A spokesperson for HSBC said: "We know that some customers are concerned about their financial resilience as a result of the increase in the cost of living.

"While we are not seeing an increase in customers not being able to meet their required payments to us, we stand ready to help if they encounter financial difficulty."

For example, many customers are coming to the end of a fixed-rate deal, and looking to review their mortgage deal earlier than usual thanks to mortgage rates rising to an average of above 4 per cent.

The spokesperson commented: "We have recently extended the window where customers can select a new rate with us from 90 days to 120 days, which could help customers during what could be a stressful and financially challenging time for them."

The bank has also created a "number of options" tailored to individual circumstances to help vulnerable consumers.

"We would strongly encourage people not to wait until they are in financial difficulty before seeking help", the spokesman said, adding: "The earlier they can engage with their lender the better."

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, prompting action from the financial services industry.

Early intervention

Similarly, a spokesperson for Santander said the bank has been "proactively contacting customers" it has identified as possibly starting to feel the squeeze.

This contact has been through a range of channels including email, SMS, online banners and via our app. Santander said it was directing these customers to the support available via its website or with third-party debt organisations.

The spokesperson added: “Santander provides a range of options to support those with financial difficulties tailored to their individual circumstance including homeowners worried about mortgage repayments.

"We would urge anyone who is facing financial difficulty to engage with their lender early so we can discuss the most appropriate support needed.” 

Factors that can be used to assess whether a customer might need support include: 

  • Overall balance amount at the end of the month
  • Customers who have a greater proportion of their income impacted by energy price increases
  • Customers whose account behaviour indicates early signs of financial pressure, such as using credit cards to draw cash or pay essential bills.

It is understood that Santander has contacted approximately 1m personal customers and 150,000 business banking customers as part of an early intervention strategy, to point them towards support available.