This follows on from last weeks cash injection by the government, and if confirmed will put pressure on HBOS, which is also taking government cash, to follow suit.
Whilst this move may help customers in the short term, it would appear to send out a message that paying your mortgage is not necessarily as important as it used to be, and could I feel create more pain in the medium term.
The move has just been confirmed, with Natwest and RBS saying:
NatWest and RBS have today given homeowners a much-needed financial breathing space with a firm commitment not to start repossession proceedings for a full six months after a customer first falls into arrears. The Bank has given a guarantee that will help lift the pressure on those homeowners struggling to meet their monthly repayments and give them more time to talk and work with the Bank and gain the support and advice they need.
The Bank already works with each customer to understand their specific circumstances and to determine which options may best help their specific situation, including payment holidays, extended terms and reduced payments. We have also trained our frontline staff to provide helpful and practical money management advice, including the active promotion of our acclaimed MoneySense initiative.
Announcing the move, Craig Donaldson, MD Retail Banking, said: "We fully understand that one of the biggest worries facing homeowners in financial difficulty is the thought of losing their home, this is especially true given the current economic climate. We hope that our commitment will reassure our customers that we are committed to providing them with enough time, professional support and the assistance they need to resolve their financial difficulties.
"Our policy has always been to encourage those customers facing financial difficulty to talk to us so that we can work together, understand their individual circumstances and jointly resolve their financial problems. The repossession route is always a last resort and one where all other reasonable attempts to resolve the position have failed and one that we look to avoid where at all possible."
The Bank is also making a commitment to ensure that a customer has had the opportunity to seek advice from independent organisations such as CCCS (Consumer Credit Counselling Service) or CAB (Citizens Advice Bureau) before any repossession actions begin.
Leslie Morphy, Chief Executive of Crisis, the national charity for single homeless people, said: “With 45,000 households predicted by the Council of Mortgage Lenders to be repossessed by the end of this year, it is critical that banks demonstrate greater understanding and leniency towards struggling mortgage holders. These measures by NatWest and RBS are a welcome first step. The six months grace period will provide a life-line for those facing the prospect of repossession and appears to go further than recent Government proposals. We urge other mortgage lenders to follow this lead and do everything in their power to prevent those in financial difficulties from experiencing the trauma of homelessness.
“We also continue to worry about the vulnerability of tenants of 'buy to let' landlords who face repossession. Tenants can find themselves out on the streets with very little notice. They need to be given at least two months warning so that they have time to find somewhere else to live.”
