In their quarterly survey of IMLA members, IMLA also reveals that in 26% of cases, lenders allow borrowers in arrears to reduce their payments, even if they are on interest-only deals, for a fixed period to help them back on track financially.
The most recent industry figures show 1.44% of all mortgages are 3 or more months in arrears. The industry accepts that as economic conditions deteriorate, the number of people going into arrears on their mortgage will consequently increase.
IMLA executive director Peter Williams said, “The government has stressed the importance of lenders working with borrowers to keep them in their homes, particularly as unemployment begins to rise. IMLA findings show that intermediary lenders are already being proactive in managing rising arrears - they are treating customers fairly, although unfortunately, in extreme situations this may mean taking possession of a home to minimise a borrower’s debt. IMLA is working with its members to find innovative ways of helping borrowers in financial difficulty to stay in their homes as long as is financially possible.”
The recently announced proposals to stimulate lending in the mortgage market would help lenders to support their customers further says IMLA. The Crosby report recommends that the government guarantees mortgage-backed securities based on new mortgage lending.
IMLA executive director Peter Williams continued, “Crosby’s suggestions are very welcome – the key is that the government implements them sooner, rather than later. With the mortgage funding markets still closed, the choice of mortgage products remains radically diminished for those with the fewest resources - many borrowers are really struggling to find a mortgage when the time comes to remortgage.”
The intermediary mortgage sector plays a fundamental role in the UK’s mortgage market - particularly in an economic environment such as this. Specialist lenders would like to see the Crosby recommended guarantees applied to existing high quality lending so that they can then fund new lending for customers who are struggling.
Peter Williams continued, “As arrears rise, the importance of the specialist mortgage sector becomes more and more obvious. There will always be customers who need specialist mortgage products – especially when the number of redundancies is rising and more people find themselves in difficult financial circumstances. It’s vital that the government does not exclude specialist lenders, many of whom operate only via the intermediary channel, from its shortly to be announced lending panel and that attention is given to this sector of the market as well as the prime sector.”
