Misselling of interest only mortgages..?

Charlton_King

Deleted_User wrote: »

No. My cat has, but I haven't seen him in ages.

He's probably bunked off, fed up with you constantly putting out dog food for him...

dunstonh

Charlton_King wrote: »

So Dunston, there was nothing specifically relating to interest only mortgages that singles them out as having been commonly 'missold' in any way, would I be right?

Not really. Of course anything can be missold. And anything can have an allegation of being missold but in reality was misbought or buyer remorse or just a compensation chasing event or a claims company committing a variation of advance fee fraud.

Excluding PPI, the latest FOS data shows mortgages (overall) account for 7% of complaints. That is less than car insurance, credit cards, current accounts, hire purchase, payday loans and catalogues.

The number of mortgage complaints (overall) fell in 2017/18 from 10,428 in 2016/17 to 8,917. The FOS dont say what the complaint area was. So, it includes admin or anything to do with a mortgage. The uphold rate (which is always a good indicator) for all mortgage complaints was 23%. That is low as the average across the board is 34%.

Interestingly (and not related to this thread), the PPI uphold rate has fallen to just 36%.

The lowest uphold rate is Endowments at 14%.
Another interesting one is IFA uphold rate is 16%

I mention those as a) endowments were linked to old interest-only mortgages and b) IFA firms usually do mortgages (even if it isnt an IFA doing it). Remember that its only advised interest only mortgages that matter.

The IFA stats published by the FOS show an uphold rate of 21% on mortgages (and just 16% on PPI). However, only 34% of IFA complaints are about advice. 34% is about admin, 11% about claims (not sure how the IFA gets involved there) and 23% about "other".

So, the stats are not really showing any particular issue with mortgage advice.

Charlton_King

Ok, thanks. As ever, a full and detailed explanation.

AnotherJoe

tacpot12 wrote: »

Interest-only mortgages were mis-sold in the past. To my mind this mis-selling only occurred when the person did not have the mental capacity to understand that are the end of the interest free period the full amount of the capital would become payable in full, and there would be consequences (e.g. repossession and eviction) if the full amount of the capital was not repaid. Or if they were not told about the need repay the capital in full and the consequences of not repaying the capital on time..

Even then, since an IO mortgage is likely cheaper than rent, they are in a better position having had 20 or 30 years of house price appreciation.
The issue would be, how would they prove they didn't have the "mental capacity to understand".


I would expect given todays litiguous society that most lenders would be moving away from IO mortgages for those reasons though, difficult to prove a negative, easy for someone just to say it wasn't properly explained despite however many documents they sign. So, easier not to do it.