The FSA has stated that over the next eighteen months many homeowners could be at risk of losing their homes. Officials state that the risk could apply to over one million homeowners, with around 25% of those who purchased their properties, took out their home loans, or remortgaged between 2005 and 2007 at increased risk of losing their home.
There are three main risk factors that have been outlined by the FSA, and those meeting all three of these risk factors are at the highest risk of losing their homes over the next eighteen months. This includes those that put down a deposit of 10% or less, those that borrowed more than 3.5 times their income, and those that took out the loan over more than 25 years.
The FSA states that around 150,000 people that took out mortgages and homes loans in that period meet all three risk factors, and hundreds of thousands of others meet some of the risk factors, which could mean that they will really struggle even with interest rates coming down.
One FSA official said: ‘We are not saying this scenario will definitely happen but we want to raise awareness of the risks. With continuing uncertainty over the economy, it is more important than ever for people to take care of their finances. Anyone with debts, including mortgages, should take stock, review their budget and make sure that it is affordable if there is change in circumstances, such as a job loss or a rise in interest rates.’
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