MorganAsh comments on rise in mortgage arrears - BoE Lenders and Administrators data

14 March 2023

Andrew Gething, managing director of MorganAsh said: “While we may be seeing signs that inflationary pressures are beginning to ease, the news of an increase in mortgage arrears shows that for many, the higher mortgage payments is creating a greater burden.

“When you also consider an increase of mortgages with LTV ratios exceeding 90 percent, the number of active borrowers who may now be in a financially vulnerable position is concerning. What we don’t know is the compounding impact of those with consumers with health or lifestyle vulnerabilities, who typically suffer more. This is a key reason why the new Consumer Duty regulation has been introduced, to ensure financial services not only better identifies but protects the most vulnerable for the long term.

“Under the new rules, firms are duty bound to ensure customers achieve good outcomes throughout the lifetime of the product. This simply isn’t possible though if firms do not have the means to measure all types of vulnerability consistently and monitor customer outcomes. This must be a priority in a high interest economy and as more borrowers potentially fall into the vulnerable category.

“Many advisers and brokers will say looking after vulnerable consumers has been a priority all their professional life. This is undoubtedly true – but Consumer Duty has increased the scope of vulnerabilities we need to consider, the evidence we need to keep and the actions we need to take. We are no longer just concerned with financial vulnerabilities, but all potential issues including health and lifestyle, domestic abuse and divorce to name just a few.”