BoE rate hike: Lenders urged to pay attention to forbearance
Lenders have been urged to focus on forbearance for squeezed borrowers, as a result of the latest base rate hike.
The Bank of England today raised interest rates to 0.5 per cent from 0.25 per cent amid soaring inflation.
While the announcement is good news for savers, those with loans will now have to make their income stretch further to cover debt repayments, Stuart Anderson, chief commercial officer at Target Group has warned.
Read more: City regulator vows to take action on consumer lenders ignoring forbearance guidance
“This is no doubt an incredibly stressful period for many and providers need to have this in mind when interacting with customers,” he said.
“As well as considering the financial strain, it’s equally as important for firms to consider the emotional and psychological implications that increasing costs and debt can cause for their customers.
Read more: FCA calls on lenders to offer more support to consumers
“Banks and lenders over the coming months will need to pay particular attention to forbearance, providing a sympathetic approach to dealing with vulnerable customers by offering reduced payment plans, providing information and help to strengthen their relationship with their finances.”
The Financial Conduct Authority introduced measures early on in the pandemic to support borrowers, including payment freezes and reduced payments.