The FSA launches a campaign to ease financial worries
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The financial worries that began in mortgage providers is now matched in their customers. One in five UK borrowers are concerned about meeting their mortgage repayments over the next 12 months, according to the Financial Services Authority, reigniting concerns over rising default rates.
Launching a £2 million advertising campaign to help worried consumers, the FSA said that almost a quarter of borrowers in trouble had no plans on how they would meet the extra cost.
Chris Pond, FSA director of financial capability said, ‘economic conditions are getting tougher, putting pressure on family finances.’
Despite wider economic turbulence, the rate of loan defaults and home repossessions in Britain has remained low by historic standards, particularly compared to the early 1990s, but it has risen in recent months, climbing 21 percent in 2007 to its highest level since 1999, according to official data.
There are concerns that this could change for the worse if the global macroeconomic situation and unemployment rates worsen.
The FSA has warned that 1.4 million short-term fixed rate mortgages would end in 2008, leaving borrowers exposed to a painful jump in rates as banks pull away from loans for more than 90 percent of the property value.
Britain’s high street lenders have all but scrapped deals offering borrowers more than the cost of their homes, with Northern Rock scrapping its pioneering 125 percent mortgage last month.
For more information about how the macroeconomic situation can effect you, to view the FSA’s mortgage tables, checklists and tips for borrowers then visit www.moneymadeclear.fsa.gov.uk
