Claims firms are believed to be targeting interest-only borrowers, as data from the Financial Ombudsman Service reveals mortgage complaints rose by 38% in the second half of 2011.
There were 4,194 mortgage complaints in the period compared with just 2,989 in the first half of the year.
But only 28% of all complaints were upheld in favour of the customer compared with 38% in the first half of 2011.
A spokesman for FOS says it expects the increase in mortgage complaints to continue because when the economic situation worsens people look at their financial situation more closely.
He says: “Many borrowers think lenders didn’t do enough to help them. Often lenders have taken reasonable steps to prevent complaints cases, which doesn’t mean borrowers are wrong to complain but it does explain the low rate of those upheld.”
Richard Farr, director at Telos Solutions, says the lack of repayment vehicles on many interest-only deals could cause problems.
The Financial Services Authority estimates that in the next 10 years around 1.5 million interest-only mortgages worth around £120bn will be due for repayment without adequate repayment vehicles in place.
Farr says: “There will definitely be more interest-only mortgage complaints as more people won’t be able to repay the loan at the term-end.
“The responsible thing would be for consumer groups and regulators to launch a campaign for borrowers to check their repayment vehicles. If they act now they could do something about it, but not if there’s just a year left to the end of their term.”
In its annual report the Financial Services Compensation Scheme estimates it will deal with 357 mortgage cases this year.
There are 21 claims management companies authorised by the Ministry of Justice with the word mortgage in their brand name.
One authorised firm, Missold Interest Only, is handling 130 mortgage complaints with all but two of them interest-only deals.
Tim Griffiths, claims manager at Missold Interest Only, says most mortgage complaints are for interest-only deals sold by brokers.
He says: “There is a problem brewing with mortgages but it is being swept under the carpet because of the payment protection insurance scandal. FOS and the Financial Services Compensation Scheme are trying to keep the mortgage mess under control as they don’t want the floodgates to open.”
He adds that FOS seems to have come up with its own way of dealing with claims rather than considering them against what the FSA rules were at the time, which explains the low uphold rate.
In January FOS revealed that from 2013 it is looking to increase from three to 25 the number of free cases firms are allowed before having to pay the £500 case fee.