Call me an old cynic if you like but I find it hard to believe that 90% of the sector of borrowers with interest only mortgages have a credible repayment strategy in place to repay the debt at the end of their mortgage term. I am readily prepared to accept that lenders will have records that demonstrate that borrowers should have a repayment strategy in place ranging from robust investment backed vehicle at one end to some nefarious belief in inheritance payments on the other and passing from robust to the irrational by way of selling the property and trading down or of selling some other highly geared asset along the way.
I just hope that the research carried out on behalf of the FCA was, in its own right, sufficiently robust to test the integrity of those less than innocent statements sitting hidden away towards the end of the application form asking what means the applicants have to repay the mortgage. After all, how many ISAs have been set up to repay balances that they might never reach anyway?
It is all well and good both lenders and the FCA saying that now is the time to nip the problem in the bud but I would suggest that for many people , to run with the metaphor, that bud has now bolted and the sharp thorns of this matter will continue to catch on the already tattered sleeves of economic recovery. Perhaps it is difficult to learn from the problems of the past but when we see a whole generation of borrowers disenfranchised as a result of their own economy with the truth in respect of their incomes on self- certification, it seems a little unlikely that the same generation , at the same time, were wholly accurate and up front about how they would repay their debt at some obscure point in the future.
One can only hope that the lenders have contingency plans in preparation to deal with what will surely be a larger problem than anticipated. Perhaps an opportunity for lenders and the FCA to work together to define a product-based solution to the risk of borrowers losing their homes.
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