FCA sending weekly survey to mortgage lenders to ensure customers treated fairly

City regulator the Financial Conduct Authority (FCA) is sending weekly surveys to mortgage lenders to collect information on rates and availability amid fears of a mortgage crisis. 

As the regulator for mortgage lenders and administrators alongside the Prudential Regulatory Authority (PRA), the FCA is keeping in touch with lenders on a day-to-day basis in order to monitor the market.

The survey asks about whether the lender has made any changes to interest rates or withdrawn any products.

Checking up: City regulator the FCA is collecting information on mortgage rates from lenders every week, including asking them when products have been removed from the market

In the weeks following the then-Chancellor’s ill-fated mini-Budget on 23 September, mortgage rates rose significantly, with the average two-year fixed rate across all LTVs reaching a peak of 6.65 per cent on 20 October, according to Moneyfacts.

The last time the average two-year fixed rate mortgage was 6.5 per cent or more was back in August 2008 at 6.94 per cent.

It has since dropped, with some lenders including Natwest and HSBC announcing rate reductions. On 28 October the average two-year fix had come down to 6.48 per cent. 

However, the Bank of England is expected to raise its base rate by 0.75 per cent when its Monetary Policy Committee meets on 3 November, in a bid to curb inflation, and this may see rates tick up again as lenders pass on the hike.

The FCA’s survey has been set up in order to provide the regulator with an oversight of of the issues affecting firms and consumers. It is not known how long the surveys will be collected for.

As interest rates have risen, the regulator has been working with lenders to ensure consumers are treated fairly amid cost of living pressures.

Mortgage rates have risen rapidly in the wake of Kwasi Kwarteng’s ill-fated budget

Aside from rising mortgage rates, borrowers have also been affected by a reduction in the choice of home loans available to them.  

Uncertain of how to price products in the the aftermath of the mini-Budget on 23 September, some lenders withdrew loans from the market, with low-deposit rates aimed at first time buyers being particularly badly hit.

A week after the tax-cutting budget the number of products on the market had fallen 43 per cent, to 2,258 loans – the lowest figure since May 2010. The number has since risen to 3,063 according to data from Moneyfacts.

Research by Citizens Advice found that one in four mortgage holders will be unable to make their monthly payments if they rise by £100, the figure rises to nearly half of borrowers if they go up by £250.

The charity also found that one in seven mortgage holders had already cut back on essentials in order to make ends meet.

There are fears of a mortgage crisis as borrowers on a fixed rates need to remortgage to much higher prices when their deal comes to an end.