Today’s launch of UK Finance’s ‘Reach Out’ campaign for borrowers struggling with their mortgage payments has been welcomed by brokers, but they have raised concerns about the long-term impact on borrowers forced to seek forbearance.
The ‘Reach Out’ campaign will be visible across radio, print, and internet beginning today (Monday, July 31st) and on television in September.
Lenders are backing the ad, which is being prepared in collaboration with M&C Saatchi London.
The campaign followed the release of the Mortgage Charter, in which the Government, lenders, and the Financial Conduct Authority committed to extensive new customer support measures. products.
However, despite brokers being overwhelmingly in favour of the campaign questions have been raised about the long-term impact on mortgage holders and potential misuse of the scheme.
Here’s what they had to say.
Riz Malik, founder & director at R3 Mortgages:
“Promoting awareness is a superb idea, particularly when it informs those who need it the most. I am worried about the enduring effects of the Charter.
“We have been told that taking the support will not impact your credit record, yet how will lenders interpret it in the future? After Covid, lenders continued to question payment holidays taken during the pandemic. This matter needs urgent attention.”
Lewis Shaw, owner and mortgage expert at Shaw Financial Services:
“It’s excellent that lenders are collaboratively taking proactive measures to educate consumers on what help is out there for them if they’re struggling with the cost of mortgage repayments due to the rapid rise in mortgage rates. My concern is that the Mortgage Charter gets used by those who don’t need help.
“Looking back to the mortgage holidays in Covid, many mortgagors took a six-month holiday not because they needed to but because they could.
“Whilst this didn’t impact their credit profiles, what we saw coming out of the pandemic was lenders refusing new mortgages because a holiday had been taken. The point of the holidays was for those in financial difficulty.
“Therefore consumers had effectively telegraphed they were, by definition, suffering hardship when they weren’t.
“I suspect we may see the same if some people revert to interest-only for six months especially in the run-up to Christmas, rather than cutting back on non-essentials, which may come back to bite them in the future.”
Michelle Lawson, director – mortgage & protection adviser at Lawson Financial Ltd:
“‘Reach Out’ is one of my pet hate corporate phrases that seems to have made its way into the English language. It actually puts me off full stop.
“The idea, I am sure, is made with good intention but it seems to have omitted the option, and surely a recommendation, for the public to take appropriate advice around their actions.
“The majority of lender staff that the public will speak to will be order takers and do not have the qualifications, knowledge, expertise and experience that brokers have and could end up unintentionally disadvantaging the people they are trying to help. All in all, a missed opportunity to champion the benefit and right to advice.”
Ranald Mitchell, director at Charwin Private Clients:
“This is positive and encouraging. Many people who are struggling instinctively heap more on credit to get by but this only worsens the problem. Initiatives like this raise awareness and will pave the way for consumers to talk to their mortgage providers, or seek independent advice.
“Short of loss of income, there are usually things that can be done to help customers overcome difficult times and unfortunately, many we speak to would have been much better served if they had contacted us sooner rather than later.”
Stephen Perkins, managing director at Yellow Brick Mortgages:
“It is good to spread awareness of what support is available to borrowers. However the concern is that no advice is being given as to whether the options available are needed or most suitable.
“With the stipulations around needing to switch back after six months likely to be missed by many, it will almost certainly lead to affected credit ratings and problems for many with future borrowing.”
Scott Taylor-Barr, financial adviser at Barnsdale Financial Management:
“In the past one of the biggest issues with people struggling to pay their mortgage and other debts is they bury their heads in the sand, avoid all contact with the lender and generally hope it all goes away. It never does and invariably avoiding the issue simply makes it far, far worse.
“The real shame is that lenders have various support mechanisms (and always have had) they can use to help borrowers in distress, but only if those borrowers engage with them, so a national advertising campaign that helps the general public to realise that can only be a good thing.”
