Speaking at the UK Finance annual mortgage lunch, director of mortgages Charles Roe (pictured) warned that this increase in expenses would create challenges for some borrowers.
He added: “Although households look to be in a good position currently, we expect increases in arrears throughout this year as cost-of-living pressures begin to bite.”
Roe said that as an industry, it was ready to help and support those struggling, but noted it was an “opportunity to build on the positive momentum achieved following the pandemic”.
“Our message is clear: customers worried about meeting their loan payments should speak to their lenders early, who stand ready to help,” he said.
He said that over the past two years the mortgage industry had “experienced one of the greatest challenges” it had ever faced.
He added that the mortgage industry had provided three million mortgage payment deferrals, which at its height covered one in five mortgages in the UK.
Roe reiterated that gross mortgage lending in 2021 had come to £309bn, which was the highest figure since 2007, and noted that 400,000 loans were provided to first-time buyers and 440,000 loans went to homemovers.
He also said there were 1.6 million refinancing transactions in the same period.
Sustainability and consumer duty major considerations for market
Roe added that improving the UK housing stock to meet net zero targets was not an “issue that can be fixed by mortgage lenders alone” and a “coordinated approach” from government, the energy sector, the retrofitting industry and other agencies was needed.
“Without this, there will be significant risk of homeowners receiving multiple, possibly conflicting, messages that lead them into the wrong course of action,” Roe said.
He continued that UK Finance welcomed the recent announcements from secretary of state for Levelling Up, Housing and Communities Michael Gove on cladding remediation plans for properties over 11 metres. He said the trade body was lobbying to get plans extended to cover all blocks of flats regardless of height.
Gove wrote to developers in January, urging them to pay to remove dangerous cladding from their tower blocks and said developers and product manufacturers who don’t pay to fix cladding scandal could be banned from the housing market.
He said: “We will continue to work with governments and lenders to ensure that the solutions being developed are fair, proportionate and that the principle of ‘polluter pays’ is followed.”
Roe said that upcoming consumer duty policy would help the Financial Conduct Authority to “identify harmful practices more quickly and intervene before they become entrenched” if implemented correctly.
He added: “However, such a fundamental rewiring of conduct regulation will be a significant undertaking for firms and not without risks for consumers. To minimise these risks, we have been strongly advocating for an extension to the proposed nine-month implementation period.”
