London Daily

Focus on the big picture.
Saturday, May 31, 2025

Young homeowners most likely to face mortgage strain, watchdog says

Young homeowners most likely to face mortgage strain, watchdog says

Young homeowners are most likely to be financially stretched as a result of higher mortgage rates, the Financial Conduct Authority (FCA) has said.

An estimated 356,000 mortgage borrowers could face difficulties with repayments by July next year, the regulator said, with those aged 18 to 34 most affected.

That is lower than its previous estimate in September which suggested 570,000 people could have problems.

Competition has returned to the home loan market, lowering fixed rates.


Worries about repayments


The FCA defined mortgage borrowers as being financially stretched if more than 30% of their gross household income was going towards mortgage payments and they were not already behind on payments.

It said that younger homeowners, and those living in London and the South East of England were most likely to find themselves in this situation.

Within this group, those rolling off a fixed-rate deal could end up paying an additional £340 a month on average under a new mortgage deal.

But the picture overall was less critical than previously anticipated, owing to changes in market expectations of the Bank of England base rate - which influences the rates lenders charge.

The previous analysis was based on market expectations in September last year, which saw the Bank rate peaking at around 5.5%, as opposed to a peak of around 4.5% in the February expectations, used to calculate the most recent estimate.

The FCA said that 200,000 homeowners had already missed payments, as of June last year.

"Our research shows most people are keeping up with mortgage repayments, but some may face difficulties," said Sheldon Mills, executive director of consumers and competition at the FCA.

"If you're struggling to pay your mortgage, or are worried you might, you don't need to manage alone. Your lender has a range of tools available to help.

"Get in touch as soon as you have concerns, don't wait until you're about to miss a payment before doing so. Just talking to them about your options won't affect your credit rating."

Mortgage rates rose throughout last year, making a new fixed-rate deal more expensive than many homeowners have witnessed for at least a decade. Rates surged after the mini-budget, but have settled down since as lenders compete again for borrowers.

Borrowers have also faced financial strain from the rising cost of living, particularly food and energy bills.


Tackling It Together: What happens if I miss payments

Within 15 working days of missing the equivalent to two or more months of repayments, your lender must:

* Tell you how much your arrears add up to

* List the missed payments

* Explain how much is outstanding on the mortgage

* Outline any charges

Your lender must then treat you fairly by considering any requests about changing how you pay, perhaps with lower repayments for a short period.

Any arrangement you come to, the FCA points out, will be reflected on your credit file - affecting your ability to borrow money in the future - as will any missed payments.

Your lender might also suggest or allow you to extend the term of the mortgage or let you pay just the interest for a certain period of time.

Lenders may offer a mortgage holiday which enables you to delay payments, depending on individual circumstances - and not to those already in arrears - but not indefinitely. Again, this will show on your credit file.

Newsletter

Related Articles

0:00
0:00
Close
Satirical Sketch Sparks Political Spouse Feud in South Korea
Indonesia Quarry Collapse Leaves Multiple Dead and Missing
South Korean Election Video Pulled Amid Misogyny Outcry
Asian Economies Shift Away from US Dollar Amid Trade Tensions
Netflix Investigates Allegations of On-Set Mistreatment in K-Drama Production
US Defence Chief Reaffirms Strong Ties with Singapore Amid Regional Tensions
Vietnam Faces Strategic Dilemma Over China's Mekong River Projects
Malaysia's First AI Preacher Sparks Debate on Islamic Principles
White House Press Secretary Criticizes Harvard Funding, Advocates for Vocational Training
France to Implement Nationwide Smoking Ban in Outdoor Spaces Frequented by Children
Meta and Anduril Collaborate on AI-Driven Military Augmented Reality Systems
Russia's Fossil Fuel Revenues Approach €900 Billion Since Ukraine Invasion
U.S. Justice Department Reduces American Bar Association's Role in Judicial Nominations
U.S. Department of Energy Unveils 'Doudna' Supercomputer to Advance AI Research
U.S. SEC Dismisses Lawsuit Against Binance Amid Regulatory Shift
Alcohol Industry Faces Increased Scrutiny Amid Health Concerns
Italy Faces Population Decline Amid Youth Emigration
U.S. Goods Imports Plunge Nearly 20% Amid Tariff Disruptions
OpenAI Faces Competition from Cheaper AI Rivals
Foreign Tax Provision in U.S. Budget Bill Alarms Investors
Trump Accuses China of Violating Trade Agreement
Gerry Adams Wins Libel Case Against BBC
Russia Accuses Serbia of Supplying Arms to Ukraine
EU Central Bank Pushes to Replace US Dollar with Euro as World’s Main Currency
Chinese Woman Dies After Being Forced to Visit Bank Despite Critical Illness
President Trump Grants Full Pardons to Reality TV Stars Todd and Julie Chrisley
Texas Enacts App Store Accountability Act Mandating Age Verification
U.S. Health Secretary Ends Select COVID-19 Vaccine Recommendations
Vatican Calls for Sustainable Tourism in 2025 Message
Trump Warns Putin Is 'Playing with Fire' Amid Escalating Ukraine Conflict
India and Pakistan Engage Trump-Linked Lobbyists to Influence U.S. Policy
U.S. Halts New Student Visa Interviews Amid Enhanced Security Measures
Trump Administration Cancels $100 Million in Federal Contracts with Harvard
SpaceX Starship Test Flight Ends in Failure, Mars Mission Timeline Uncertain
King Charles Affirms Canadian Sovereignty Amid U.S. Statehood Pressure
Trump Threatens 25% Tariff on iPhones Amid Dispute with Apple CEO
Putin's Helicopter Reportedly Targeted by Ukrainian Drones
Liverpool Car Ramming Incident Leaves Multiple Injured
Australia Faces Immigration Debate Following Labor Party Victory
Iranian Revolutionary Guard Founder Warns Against Trusting Regime in Nuclear Talks
Macron Dismisses Viral Video of Wife's Gesture as Playful Banter
Cleveland Clinic Study Questions Effectiveness of Recent Flu Vaccine
Netanyahu Accuses Starmer of Siding with Hamas
Junior Doctors Threaten Strike Over 4% Pay Offer
Labour MPs Urge Chancellor to Tax Wealthy Over Cutting Welfare
Publication of UK Child Poverty Strategy Delayed Until Autumn
France Detains UK Fishing Vessel Amid Post-Brexit Tensions
Calls Grow to Resume Syrian Asylum Claims in UK
Nigel Farage Pledges to Reinstate Winter Fuel Payments
Boris and Carrie Johnson Welcome Daughter Poppy
×