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Vulnerable customers and SVR mortgages

Journalist: Callum Mason, i

ended 24. June 2023

With the base rate increasing yesterday, there's a possibility many SVR mortgages may increase beyond 8%.

Is there a concern that more vulnerable customers - those with illnesses, or perhaps who are older and less savvy - may be on these deals and now paying far higher rates than they need to? Given they are the default rate people pass on to when their current deal ends?

What action is needed from policymakers/the industry to help these people?

5 responses from the Newspage community

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Editor
Riz Malik
Independent Financial Adviser at R3 Wealth
The entire mortgage sector requires an independent examination in the aftermath of this mortgage crisis, ensuring that those most in need are not overlooked. We have advocated for the establishment of an autonomous task force, committed to implementing strategies that enhance awareness of available options among people. Additionally, it is essential that individuals have identifiable points of contact for assistance.
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Rhys Schofield
Brand Director at Peak Mortgages and Protection
It's worrying how many people just sit on standard variable rate - only yesterday I saved a customer over £600 a month in repayments all from a 1 hour meeting.

The problem I have is that the regulator exists to protect clients yet is silent on actually educating people to help themselves. When they spent £42 million on a PPI ad with Arnies head on a robot, why aren't they doing anything in the middle of a cost of living crisis to say, go on Google, search for mortgage brokers near you, speak to whovever has great reviews?
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Gary Bush
Financial Adviser at MortgageShop.com
A statistic from the FCA Financial Lives Survey 2020 is that 24 million in the UK have characteristics of vulnerability, this figure was from February 2020, before Covid - how high is that figure now we have been through the lockdowns and had 13 increases in Bank of Englan base rate, it's worrying. A decent financial adviser always has vulnerability on his mind when dealing with clients and as a part of the FCA's upcoming Consumer Duty an analysis of all client's potential needs to be demonstrated on client files. In our opinion the policymakers need to look carefully at the use of Swap Rates for funding and rate decisions - it all seemed to work fine when there was no movement in base rate, well it would, however after the past 18 months of increases it's made this system look kneejerk and paranoid. The financial regulator's demand from regulated parties that market panic should be avoided, it's clear that the UK lenders missed that part in the small print.
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Joe Stallard
Director and Advisor at House and Holiday Home Mortgages
High standard variable rates are definitely a concern for those who aren’t aware for whatever reason, or are perhaps trapped on products and not able to move – mortgage prisoners

This is where the media comes in and can be really helpful. Any information about general interest rate rises can be useful. And hopefully, lenders are also contacting those customers to let them know and advising them of what’s available. On top of that, everyone in this situation should be encouraged to get help.

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Gary Boakes
Director at Verve Financial
These situations are really difficult, as they have probably had a letter from their lender explaining the situation. If they used a broker or a company then again they should be reviewing emails, calls and letters in plenty of time to explain the process and the impending SVR rates. If these have all been missed for whatever reason, illness, overwhelmed, miss understanding then it is going to be difficult as it relays in that person to pick up the phone and contact their lender or a broker. Unfortunately, unless the lender knocks on their door there is not much else the lender, broker can do. The news, social media could do more to explain that situation so it is out in the public domain more.