Paul Broadhead, Head of Mortgage Policy at the BSA said:
“Today’s follow-up from the FCA on interest-only mortgages paints a broadly positive picture in which lenders are taking action to engage with and help customers with this type of mortgage. The objective since 2013 has been to discuss alternatives with borrowers who risk being unable to repay their mortgage at the end of their term. For those who have yet to engage, we welcome FCA clarity that the onus is on the consumer to respond to contact from their lender. The onus is on us as lenders to ensure that we are easy to engage with.
"The BSA will work with its members to integrate the recommendations from this Thematic Review into building societies' contact strategies. We welcome the research report into the reasons for customers failing to engage. We also support the FCA's efforts to encourage customers to talk to their lender as early as possible.
“The proportion of interest-only mortgage balances have steadily fallen in the past few years. Overall, the product has worked well for most borrowers. The initial FCA research found that 9 in 10 borrowers with an interest-only mortgage set to mature by 2020 had a repayment strategy in place. Since then the FCA has accepted that some interest only products such as the retirement interest-only mortgage, on offer from some building societies, have an appropriate place in the market. In this latest review, we welcome the FCA’s clarification of available options for interest-only mortgage customers regarding early repayment of their mortgage.”