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Easing The Pressure On Mortgage Lenders

Easing The Pressure On Mortgage Lenders

05 December 2022

The mortgage market may have cooled down a little since the chaos of October, but lenders and their customers still face choppy waters in the year ahead. Beneditta McManus, Account Director at EQ Customer Resolutions explores the rising tide of financial vulnerability, and the growing need for additional resources to manage that demand.

“Given the uncertainties we face it is important to be humble about what we don’t know or still have to learn,” - Sir Dave Ramsden, Deputy Governor of the Bank of England

Two months on from Kwasi Kwarteng’s ‘mini-Budget’, the mortgage market has settled down a little, with the average five-year fixed rate dropping back below 6% on 22 November. The figure had of course surged to 6.5% on 20 October, the day Liz Truss resigned as Prime Minister (source: moneyfacts.co.uk).

But while the Deputy Governor of the Bank of England, Sir Dave Ramsden, made a speech on 24 November discussing the possibility of a cut in the base rate, his expectation remains that increases are more likely to be required first. “Given the uncertainties we face it is important to be humble about what we don’t know or still have to learn,” he said, reflecting on the fragility of the UK economy. Having negotiated such a challenging autumn, it’s clear that mortgage lenders and their customers continue to face choppy waters ahead.

And the pressure on lenders is significant. With many borrowers struggling to make their monthly payments, providers are faced with another surge in customer queries and complaints. And while being chivvied along by the FCA “to do a lot better” on 3 November (the Borrowers In Financial Difficulty report ), lenders also face the challenge of meeting FCA Consumer Duty compliance by July 2023.

Mortgage holidays

Even if interest rates don’t rise as high as many expect, the cost of living crisis is pushing many borrowers into desperation, with a quarter of London homeowners saying they expect to struggle with their mortgage payments this winter (source: City Hall). London is expected to be the hardest hit region, with average annual mortgage payments expected to increase by £8,000 (source: The Resolution Foundation). Little wonder that London Mayor Sadiq Khan has urged a return to the mortgage holidays introduced during the pandemic crisis. And the picture across the rest of the UK isn’t much brighter. The FCA Financial Lives Survey published on 21 October reported that 7.8 million people are struggling to pay their bills, up 2.5 million from 2020.

Do you need support?

Are you seeing an increase in activity within your customer service and collection centres as a result of this volatility? Do you plan to deliver proactive outbound communications campaigns to your customers making them aware support being offered? Our highly skilled interim resources can help with all of these options. The team at EQ Customer Resolutions has a long track record of working with financial services clients to ensure they get on the front foot and manage customer concerns proactively. Our specialist complaints and remediation teams and advisors can help you to manage vulnerability issues consistently and diligently, as well as reducing your customer complaints while meeting the exacting requirements of the FCA.

Bringing external experts on board also frees up your inhouse teams to focus on day-to-day activities, and the service can be scaled to cope with peaks in activity, as and when you need it. On a broader strategic level, we also support clients through our process review techniques and the use of MMX/ Complaints Pro to handle complaints more effectively.

It could be a challenging winter ahead. Please get in touch if you’d like to find out more about how we can take support through this period.

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