Taxpayer-owned banks are set to warn their mortgage customers that they must put their mortgage repayments first, rather than renewing their digital TV subscription or buying a new phone.
UK Asset Resolution (UKAR) is to contact 30,000 Bradford & Bingley and Northern Rock Asset Management customers to warn them of the real possibility of losing their homes.
Bradford & Bingley and Northern Rock were nationalised in 2008 and are now owned by the taxpayer. They are not open to new business. UKAR manages the £80bn of mortgages bailed out by the taxpayer and will phone those borrowers it fears are most at risk of falling behind on their mortgage repayments.
Chief executive Richard Banks said: "Some people won't cope when interest rates rise, but for others there are remedies.
"They need to think about what is their most important debt. It's not the credit card, or renewing their Sky subscription, or going out for the latest mobile technology, it's their mortgage. They have been protected by low interest rates, but the consensus is that rates will start to rise late next year."
He added that the pain of government spending cuts has not yet been felt countrywide.
UKAR believes that around 10% of its borrowers could struggle with their repayments, and is cross referencing with credit agencies to ascertain which customers may be having difficulties with debt.
UKAR said around 10% of its customers were having difficulties repaying their mortgages. The organisation is checking with credit agencies to see when their customers are getting into difficulties with debt.
"At both Bradford & Bingley and Northern Rock Asset Management, we are running a pilot and are phoning customers and asking them how things are going," said Banks.
"We are also asking them what their plans are for when interest rates go up. Repossession is the last option for us. We want customers to look at their finances and change their behaviour."
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