“Arrears and possessions are rising, as expected, reflecting the difficult market circumstances, but this is not mortgage meltdown as we saw back in 1991 when we saw 36,600 home possessed in the first half of the year and 75,500 in the full year. Indeed these latest figures suggest the current situation isn’t as bad as some suggest. Any increase in arrears or possessions is undesirable and very sad for those concerned but there are real risks from talking up the problem.
“For the government, and indeed for lenders, there are two priority issues which should be dominating the policy agenda. The first is restarting the funding market so lenders can once again tap wholesale funds that would enable a wider range of reasonably priced mortgage products to be offered to consumers. This would help borrowers in difficulty in a number of ways including trading out. We continue to look to the Treasury and Bank of England to play a full part in encouraging this.
“The second priority would be to revamp the government’s income support for mortgage interest scheme. This is dangerously out of date now in terms of its coverage of the market (the mortgage value limit for assistance is £100,000) and time in which it kicks in (only after 38 weeks). A decent ISMI scheme would stop people getting into difficulties and keep them in their homes. It is targeted at those in need. Labour was strongly critical of the Conservative government for cutting it back in 1995 and it should move to up date it immediately.”
