The latest figures should alarm the nearly 1.6 million mortgage holders expected to renegotiate their agreements by year’s end
Around half a million UK mortgage holders are projected to miss a payment within the next six months, as per new data from AI-driven financial communication platform Eligible.
The latest figures should alarm the nearly 1.6 million mortgage holders expected to renegotiate their agreements by year’s end, indicating that many could be pushed towards greater financial instability.
Over the past year, nearly 670,000 have already missed a mortgage payment, Eligible noted.
Amid increasing living costs and rising energy bills, 5.4 million Brits have identified their mortgage payments as a significant source of financial stress. A key issue, per Eligible, is the lack of effective communication between lenders and borrowers, with research suggesting that 1.3 million UK residents do not fully grasp their mortgage terms, primarily because of insufficient two-way communication with their banks.
Following the FCA’s introduction of Consumer Duty, which mandates better consumer outcomes through proactive service, the pressure is mounting on banks to improve real-time, tailored communications with their clients.
Eligible suggests that banks can employ advanced technologies such as their own machine learning programs to identify at-risk customers and provide personalised support tailored to individual circumstances.
The fundamental problem is that mortgages are a financial product that customers take out only once every three to five years, according to Zahra Hassan, co-founder of Eligible. This means that they are not regularly engaging with their mortgage and are not in the loop of what all their options are.
She said: In a wider sense, increasing interest rates, along with higher energy and living costs, heighten vulnerability to default. Nevertheless, the key factor that pushes someone from financial strain to actual default is their lack of awareness about the array of options that their bank could have offered to temporarily ease their financial burden, especially on their biggest financial obligation – their mortgage.
She added: What is needed is an active two-way dialogue. This way, borrowers can better appreciate that lenders are here to assist them.
