Speaking at the British Banking Association conference today Bailey said the way in which banks had sought to use forbearance in the latest recession meant fewer homes were repossessed.
He said: “It is easy to imply that forgiveness is a bad thing. Rather, we should deal with the consequences of forgiveness, not prevent it. The reason for that is because forgiveness has a very good side to it, namely that fewer jobs are lost and fewer homes re-possessed where it takes place.”
And he added: “Let me say something unusual now - I think that the banks deserve a thank you for the way in which they have sought to use forbearance.”
Forbearance measures include reduced interest payments, payment holidays and offering mortgagors the option of switching to interest only while they get back on their feet.
The Bank of England estimated that 5% to 8% of mortgage households had been helped by some kind of forbearance and around 27,500 additional households may have moved into serious arrears without this help.
