The Council of Mortgage Lenders (CML) has reported a drop in arrears and repossessions in England for the first quarter of the year. At the same time, it warned against complacency and joined the Building Societies Association and pressure groups, including the charity, Shelter, in writing to the new government asking it to help the thousands at risk of losing their homes.
In a joint letter to the new Chancellor, George Osborne, and the new Business Secretary, Vince Cable, they call for a clear commitment to extend current support measures for borrowers in most financial difficulty. They pointed out that the drop in repossessions was “deeply dependent on current low interest rates and the time-limited policy measures currently in place”.
As the letter explains: “There is a risk that higher interest rates or unemployment would tip into arrears a number of finely-balanced households who are currently coping, and would undermine the capacity of households struggling to get back on their feet.”
In the view of CML director general, Michael Coogan, while all eyes are on the new government and what steps it will take to address the economy, “we cannot emphasise too strongly the importance of continuing to fund the support mechanisms that are proving effective in containing mortgage arrears and repossessions.
“We are acutely conscious of the beneficial influence that low interest rates and the package of support have played so far. The dampening effects on households and the wider housing market that fiscal tightening is likely to exert are still to be felt, but it should be a key priority to support borrowers most in need and maintain funding for the government’s housing policies.”
To reinforce the point, Shelter commissioned a substantial survey from YouGov. Interviewing almost 4,500 people in Britain, it found that 29 per cent of mortgage holders had not thought about how they would pay their mortgage if interest rates go up – equivalent to 5.4 million adults across the country.
Graeme Brown, director of Shelter Scotland, warned: “Hundreds of thousands of homeowners desperately need the new government to continue the help that enables them to keep their home. Current support schemes are set to wind up at the end of the year but could be pulled away at any time, which will leave many people with no safety net and facing the real possibility of repossession.”
He added: “In addition, the Scottish Government must play its part in ensuring homeowners are kept in their homes where possible. They have done an important job by passing the Homeowner and Debtor Protection Act, which will require lenders, by law, to pursue every possible alternative before taking legal action in Scotland. But now ministers must ensure it is introduced as a matter of urgency.”
There are no figures available for repossession levels in Scotland. Shelter Scotland has repeatedly called for these to be collected and published.