Don't panic over new loans, mortgage holders told

Don't panic over new loans, mortgage holders told

The Financial Services Authority today urges 1.4 million mortgage customers looking for new home loans not to panic, amid signs that homeowners are worried about making repayments this year.

Launching a £2m advertising campaign aimed at mortgage customers whose fixed rate or discounted deals are coming to an end, the FSA is trying to help homeowners "stay in control" of their finances.

It has conducted a survey of homeowners' attitudes towards their mortgages and found that one in five mortgage holders are concerned about meeting their repayments in the next 12 months. When the concerned customers were asked how they would meet the costs, a quarter said they had made no plans to address the potential problem.

The advertising campaign - to be run in newspapers, posters and on the radio - follows the FSA's alert in January that more than 1 million homeowners could be at risk of serious financial difficulty and at risk of losing their home in an economic slowdown.

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Chris Pond, director of financial capability at the FSA, said: "Economic conditions are getting tougher, putting pressure on family finances."

The campaign outlines a three-point plan for mortgage customers:

· check your budget;

· start planning now;

· get help from your mortgage lender.

Pond said the checklist aimed to set out simple steps in "difficult times".

"And for those who are really struggling, don't panic. Talk to your lender or get free confidential advice," he added.

Some 1.4 million mortgage customers are on two- and three-year deals which are coming up for renewal. They face paying higher rates as mortgage lenders are tightening their criteria and some are stepping back from the market because of difficulties raising finance in the money markets.

In its financial risk outlook in January the FSA admitted to being concerned that borrowers were badly prepared for any worsening in economic conditions.

At the time, it said homeowners may have become too reliant on cheap credit and rising house prices to sustain their levels of spending.

The FSA has warned that a "significant minority" - some 1.04 million people - with large mortgages who had borrowed three and a half times their salaries could be at risk.

The FSA's new campaign is particularly targeting customers whose fixed-rate and other mortgage deals are coming to an end this year, as well as householders looking to move home or remortgage, and customers who think they may struggle to meet mortgage repayments if their circumstances change.

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