The FCA’s latest annual report and accounts reveals that 0.3 per cent of borrowers fail to make their mortgage payments within six months of taking out their loan.
This figure compares to 0.25 per cent of households falling behind on their payments after six months this time last year.
In 0.17 per cent of cases, shortfalls are occurring in the second month of taking on a mortgage. While UK Finance recently reported that mortgage arrears hit a record low, the FCA figures are significant because they focus on payment shortfalls within two to six months. This failure to keep up payments in the short term “could be an indicator of an unsuitable or unaffordable product having been sold,” says the watchdog.
“However”, it adds, “we recognise that missed payments can be caused by macroeconomic changes like employment trends. As such, they will not always indicate unaffordable or unsuitable lending,” before adding that it will continue to monitor the situation in case of “sustained increase,” which would prompt more investigation.
On the publication of the report, FCA chair Charles Randell says that “we must act swiftly and decisively to tackle harm to consumers, particularly the most vulnerable. In the process, we have to make some difficult choices, learn from what works and what doesn’t – and be open about both.”