Interest rates have risen for the first time in a decade and mortgage holders across the UK are no doubt feeling nervous. It is easy to write off the 0.25 per cent rise as insignificant; borrowers may have to pay £20, £30 or £50 more a month. What’s the big deal?
But the worrying thing is, for many families it is a big deal.
Indeed, the FCA’s recently released findings from its latest consumer survey should have made everyone in financial services sit up and take notice.
According to the survey, one in six borrowers would struggle to manage their monthly mortgage repayment if it were to rise by £50. One in six. That means an awful lot of borrowers out there feel panicked about interest rates — not least because Bank of England governor Mark Carney has made it clear this rise will not be the last.
This all points to a rise in remortgage business as borrowers rush to secure a better deal before the best rates disappear. But that is not the only way in which you could be helping clients.
There has never been a better time to contact clients and ensure they are fully protected financially. Unfortunately, there is a distinct lack of preparedness among borrowers in the UK.
The FCA study also revealed that a worrying number of people had no protection in place whatsoever; meaning that, if they became unable to work and, as a result, unable to meet their mortgage repayments, they would risk losing their home.
This rate rise will make finances even tighter for many households and will mean borrowers have less disposable cash to fall back on if something should go wrong.
Take the time to revisit your clients now and explain to them what the increase will mean and how you can help them.
The protection gap in the UK must be reduced and there are so many reasons why now is the time for that to happen. But it all depends on you and the advice you offer to your clients. Do not let them down.
Jason Berry is head of sales at Uinsure