One of these was switching the mortgage to a part or full capital repayment basis after checking a customer’s affordability and gaining their consent. HML has looked at 10,846 live accounts under its management that have been converted to full or part and part at some point during their duration and found that 8,008 switched to full repayment between January 1st 2008 and March 31st 2013.
Converting to full repayment has proven popular in the North West, with ten per cent of conversions occurring in the region. This move is also prevalent in the West Midlands, with 9.3 per cent of conversions taking place here.
The South East and East Anglia are also in the top five most popular regions for conversions to full repayment. Ireland (while not regulated by the FCA) has, however, experienced the most mortgage account conversions to full repayment since the start of 2008, representing almost a quarter of the total.
The figures would appear to show that interest-only residents in Ireland, the North West and the West Midlands are trying to clear larger portions of their mortgage.
The North West and South East are the two most popular regions for part and part conversions, accounting for 3.65% of the total each. The figure stands at 2.43% and 1.03% for the West Midlands and Ireland respectively.
Conversions to full repayment or interest-only are more prevalent than mortgage accounts being switched to part and part, despite Ben Chambers, product manager at HML, noting the benefits of moving to part and part.
Historically, customers simply believe they have to switch to full repayment or remain on interest-only. Moving to full repayment isn’t always the best option for customers, as this can result in them being stretched and potentially missing payments further down the line.
Moving to part and part can help customers with their future living arrangements. By generating more equity in their home, they can find options open up to them, such as downsizing or remortgaging, without feeling overwhelmed by potentially unmanageable monthly repayments.
HML recently conducted an interest-only customer contact campaign, and by giving borrowers access to a repayment calculator, we experienced an increase in the number of conversions to part and part. Such proactive contact and the assessment of a customer’s affordability are what the FCA drove home in its recently released thematic review findings.