Mortgage News
CML: Borrowers’ safety net must be strengthened
State support for mortgage borrowers in financial difficulty must be maintained at current levels and strengthened with further initiatives such as encouraging voluntary sales, the CML has said.
The trade body said that the safety net for home owners was not complete, comprehensive or consistent in its availability, and it was the combined efforts of borrowers, lenders, the government and money advice agencies that had helped keep mortgage arrears and possessions in check.
The CML maintained in its News & Views report that, despite the pressure on government finances, it must not cut support.
Ahead of the today’s Spending Review and in conjunction with housing charity Shelter, the CML made recommendations that it believes will minimise the number of repossession cases, including retaining the 13-week qualifying period and capital limit of £200,000 for people claiming support for mortgage interest; maintaining funding for free debt advice; and retaining the existing mortgage rescue scheme.
In addition, the CML said the government must consider further measures including ways to encourage borrowers to consider voluntarily selling their property to avoid court action and options for a new form of insurance that covers vulnerable borrowers who are not currently protected by the safety net but who still aspire to become home-owners.
It suggested this could be jointly funded by borrowers, lenders and the government and would provide a more effective and targeted approach than the “blunt instrument” of the FSA’s affordability proposals.
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The CML said: “Despite the pressures on government finances, there should be no further erosion of state support for borrowers in difficulty. These measures help contain the wider costs of homelessness, and deliver wider benefits to the government. Now is not the time to weaken the existing safety net.
“The government should also consider other initiatives, including new proposals for insurance and a means of presenting the voluntary sale of a home as an appropriate option for borrowers in the right circumstances, to see whether the safety net can be strengthened to help borrowers avoid possession through the courts.”
Read the CML’s full report here.