100,000 homeowners face mortgage hikes before election

National research from Eligible reveals that almost half-a-million Brits are set to miss a payment in the next six months

Key Stats:

• 492,000 mortgage holders are set to miss a payment in the next six months
• 670,000 mortgage holders have already missed a payment in the past 12 months
• 5,417,000 Brits cite mortgage payments as a significant cause of financial-related stress
• 1,340,000 Brits do not understand the terms of their mortgage – because they don’t communicate with their lender
• 487,000 mortgage holders are about to default, but will not be supported by their lenders with options to restructure

 
New data from Eligible – the UK’s first platform used by banks to provide bespoke financial communication through AI – has revealed that 492,000 mortgage-holders are set to miss a payment in the next six months. With the Bank of England voting to hold interest rates at their 16-year-high of 5.25%, many are fearing further increases to their mortgage costs as hopes of an early cut to the base rate continue to dwindle. This week’s news ought to concern the 100,000 homeowners bracing for mortgage rises ahead of the July 4th election, potentially pushing almost 3,300 households towards further financial insecurity each day, with Eligible’s data revealing that a further 670,000 mortgage holders have already missed a payment in the past 12 months.

5.4 million Brits have cited their mortgage as a significant cause of financial-related stress alongside a spiralling cost-of-living and burdensome energy bills. Eligible has singled out communication as a prominent factor contributing to the imminent mortgage-payment crisis, with their research indicating that 1.3 million Brits do not understand the terms of their mortgage due to the absence of a sophisticated two-way dialogue with their lender.

According to Eligible, the onus is increasingly shifting onto banks to provide tailored and proactive real-time communication with their customers, particularly in light of the FCA’s introduction of Consumer Duty, which came into effect from 31^st July 2023. Setting a new standard for consumer protection in financial services, Consumer Duty requires providers of financial services to provide ‘good outcomes’, primarily driven through proactive communication from the service provider. Aiding the provision of good outcomes, Eligible highlight that developments in technology– such as their own machine learning programmes – can be utilised by financial institutions to identify at-risk customers and generate personalised support adapted to their unique situation.
 
Zahra Hassan, co-founder of Eligible, comments:
 
“The fundamental problem is that mortgages are a financial product that customers take out only once every 3-5 years. This means that they aren’t regularly engaging with their mortgage and aren’t in the loop of what all their options are.

“In a broader sense, rising interest rates, coupled with increased energy and living costs, heighten vulnerability to default. However, the key factor that pushes someone from financial strain to actual default is their lack of awareness about the array of options that their bank could have offered to temporarily ease their financial burden, particularly on their largest financial obligation – their mortgage.

“What’s needed – and what we’re doing at Eligible – is an active two-way dialogue, and AI-powered systems like Eligible facilitate this by initiating interactions with customers and monitoring their responses to gather insights. For instance, we proactively send educational content to customers to assess their anxiety levels and their understanding of their current financial products. Based on this information, we can fine-tune our approach by crafting more personalised educational content and adjusting our tone to be softer, supportive, and empathetic. This way, borrowers can better appreciate that lenders are here to assist them.”