With the rising cost of rent and mortgage payments, it’s no wonder that many Brits struggle to meet these monthly payments. The Financial Conduct Authority’s (FCA) new fair treatment guidelines came into force on the 6th of May, with the aim of helping mortgage payers that are in arrears to pay off debts.
The personal finance experts and prepaid Mastercard®️ providers, icount, recently conducted a survey to find out more about why Brits are struggling to meet mortgage repayments, and how the new FCA guidelines are likely to help.
Why are Brits struggling to meet rent and mortgage payments?
Icount’s survey found that there are a number of reasons why Brits are struggling to meet their monthly rent and mortgage payments. Worryingly, 1 in 5 Brits admit to resorting to paying their rent or mortgage on a credit card during the last 12 months, with men being twice as likely as women to do this.
There are a wide range of factors that count towards mortgage and rent arrears, but the icount survey found that the top 5 reasons for rent and mortgage shortfalls are:
1. General living costs
2. Benefits payment gap
3. Unexpected Bills
4. Changing jobs
5. Prioritising other debts
In addition to this, 1 in 3 of those who are in mortgage arrears blame Universal credit payment gaps for their inability to meet their mortgage payments.
The factors that contribute towards rent and mortgage arrears are concerning, and these are likely to become even more of an issue over the next few years. With economic and political uncertainty around Brexit still playing heavily on people’s minds, we may find that over the short to medium term, increasing numbers of people will struggle to meet their monthly mortgage payments.
FCA fair treatment guidelines
The new Financial Conduct Authority guidelines that came into play on the 6th May 2018 ask mortgage lenders to review the way they calculate mortgage arrears. Rather than adding arrears to the balance used to calculate monthly payments, the FCA is advising that lenders should make alternative arrangements to pay their arrears. The aim of this is that it will make it simpler for people to manage the arrears on their mortgage.
We have yet to see what the real-world impact of these new guidelines will be, but it is hoped that it will make mortgage payments and arrears less of a burden for those who are struggling to meet their monthly payment amounts.