Mortgage lenders should issue annual warnings about the impact of higher borrowing costs on borrower finances, as concerns grow over the impact of interest rate hikes.
Labour MP Chris Leslie, shadow chief secretary to the Treasury, plans to raise the issue with Martin Wheatley, head of the Financial Conduct Authority next month, according to a report in the Financial Times.
Speculation is growing that the Bank of England could raise rates well before the 2016 date originally implied by governor Mark Carney's forward guidance policy, Leslie said.
Yet too many borrowers were taking on debts on the assumption that the current 0.5% rate will continue, the report quoted him as saying.
Leslie said mortgage lenders should be forced to contact their customers once a year to set out how their personal finances would be affected if interest rates increased.
This would help them plan for the time when rates rise to 3%, 4% or 5%.
Leslie said. “If we continue having so many inflationary pressures in the system we could see interest rates rise before 2015 – that’s not impossible at all. People need to know about this.
"You need a requirement on all lenders to send a note every year to remind customers how they will be affected if rates normalise.”
Public expectations of inflation rising, up to 3.2% in October from 2.5% in September, according to a YouGov survey.
Financial Conduct Authority rules require every lender to contact borrowers once a year with an update on their mortgage that sets out the type of loan, how much the borrower still owes, the remaining term and the interest rate that applies.
Comments