There has been a significant reduction in lenders’ interest only back books. Between Q4 2012 to Q4 2013 there has been a 12% drop – compared the same period a year earlier when there was a reduction of less than 2%.
Overall, around 30% of customers contacted have responded so far. Of these, around 80% already had a clear repayment strategy.
Firms are offering customers a range of options to address the interest only shortfall. Some of these options include: switching to a full repayment mortgage, allowing overpayments to reduce the end-of term balance, and extending the term of the mortgage.
Martin Wheatley, chief executive officer at the Financial Conduct Authority, commented:
“This forward looking and consumer-at-the heart type of action is a prime example of a model demonstrating good conduct outcomes and putting customers first; it’s good to see that real progress is being made. What I am particularly pleased with is how industry, regulator and consumer have come together to address this problem as one in a collaborative way. It’s too soon to declare success, but these are encouraging findings.
“Everyone needs to keep the momentum going. Our advice for borrowers is unchanged: you must with engage with your lender; this is a shared problem and you need to work together to resolve it."
