A big percentage of mortgage holders, worried over meeting their repayments, still do not have any concrete plans on how to deal with this. It was a relatively small survey; the FSA has record of only about 573 people who were willing to give answers on their respective mortgages.
The FSA is concerned about this situation, and it will implement a £2m advertising campaign along with a snazzy advice guide for homeowners. Homeowners whose fixed-rate deals will expire at the end of this year, will receive plenty of attention from the FSA over the next couple of months.
Chris Pond, one of the FSA directors, says that “Economic conditions are getting tougher, putting pressure on family finances,” and this is creating more repossessions.
The original poll, which asked 2,011 people questions, found that 19% of those targeted were especially concerned about their rising commitments. In early February, the Council of Mortgage Lenders (CML) mentioned that repossessions have increased by nearly 21% in 2007. This means that over 27,000 homes were repossessed. This is a very high figure, the highest figure since 1999. The CML also reported that the average homeowner is falling behind on payments by about 8.6% in 2007 compared to the average of 2006.
What’s worse, this total might even rise in 2008, especially with the credit squeeze that will lighten our wallets even further.
Only £5 worse off?
A separate study, conducted by the Centre for Economics and Business Research for Asda, has suggested that the average UK household is only £5 a week worse off than the same period in 2007. Why is this? Well, rising petrol and food costs are the culprits.
But there is a light somewhere. The FSA will now publish a new guide to help people better manage their mortgages. Touted as a checklist that can help in financially difficult times, it suggests people check their budgets whenever they consider any significant expense.
Homeowners should know their options very well, and they should do this well before their current deal ends. Those who are already struggling should try not to panic too much, but should consult their lenders and request free, confidential information from an independent debt advice agency.