In light of the looming mortgage crisis threatening millions, James Green, investment director of the deVere Group, has issued an urgent call-to-action for the Government, mortgage lenders, and financial advisors to create a unified, effective approach to avoid an impending financial crisis.
The deVere Group is a globally recognised financial advisory, asset management and fintech organisation.
This warning comes on the heels of a report by the National Institute of Economic and Social Research (NIESR), a prominent independent think tank, suggesting that due to the Bank of England’s recent interest rate hike, an estimated 1.2 million UK households could deplete their savings by the end of the year owing to increased mortgage repayments.
“The Bank of England’s surprise 0.50% hike will hit millions of homeowners as the interest rates on many mortgages are directly linked to the central bank’s base rate,” said Green.
He stressed the alarming statistic that approximately 4% of households nationwide could exhaust their savings by the end of the year due to increased mortgage repayments.
In Green’s view, to effectively confront this crisis, a thorough and concerted effort from the Government, mortgage lenders, and financial advisors is crucial. “By recognising the urgency of the situation and collaborating closely, these stakeholders can play a pivotal role in alleviating the burden of rising interest rates on middle earners across Britain,” he stated.
Green proposed a multi-faceted approach to combat the impending insolvency crisis. He urged the Government to enforce stricter regulations to protect borrowers, implement measures to ensure responsible lending practices, encourage collaboration between lenders and borrowers, and focus on accessible financial education programs.
Mortgage lenders, according to Green, can play their part by working closely with struggling borrowers to explore viable solutions, such as restructuring loans or extending repayment periods. Transparency in communication and providing clear information about interest rate changes should also be prioritised.
Financial advisors, on the other hand, can offer support by conducting in-depth financial assessments and providing personalised advice on debt management, refinancing options, and budgeting techniques.
The stakes were summed up by Rachel Wolf, a founding partner of Public First who co-authored the 2019 Conservative manifesto: “With the end of low interest rates, the parts of middle Britain that aren’t yet retired will suffer in a way that for them will dwarf the energy bill crisis.”
In closing, Green concluded: “Only through a united front can we successfully tackle the mortgage timebomb and protect households from the devastating consequences of insolvency.”
