The financial ombudsman has warned that many homeowners are in denial about their mortgage debt, causing many to face the threat of repossession.
With a rise in the number of complaints centred around mortgages and other secured loans over the last twelve months, the ombudsman has seen its conflict resolution role between lender and borrower become ever more important. Of the 13,659 complaints received in the last year – a rise of over 800 – nearly 40% revolved around homeowners facing difficulties with monthly mortgage repayments.
However, this is thought to be just a small percentage of the actual number of homeowners in mortgage arrears. The Council of Mortgage Lenders (CML), suggests that the total could be higher and, as such, the financial ombudsman is fearful that so-called “debt denial” is on the rise.
In response to the findings, the chief financial ombudsman has urged homeowners to address their financial issues sooner rather than later. Tony Boorman told the BBC: “Mortgages are the most significant purchase most of us will make in our lives, so we understand why people might be reluctant to say that they’re struggling to pay for their home. Many of the cases where people face losing their home have been heart-breaking to deal with, but could potentially have been avoided.”
Currently, the ombudsman only upholds around 30% of complaints that come its way and it is keen that both homeowners and lenders take more responsibility for borrowing in the form of mortgages. Mr Boorman is fearful that too many of those in possession of a mortgage are leaving it too late to resolve their financial issues and they are becoming reliant on writing off of their debts.
In conclusion, Mr Boorman suggested that lenders could play a more significant role in helping borrowers to manage their mortgage money.