The number of homes being repossessed has increased by nearly 30 per cent according to the Council of Mortgage Lenders. However, consumer groups are outraged as they claim that mortgage lenders are too quick to repossess homes of those in arrears.
The Citizens Advice Bureau (CAB) feel that the number of repossessions is spiralling out of control and some lenders may be taking possession action as a matter of routine rather than a last resort. The Bank of England has also been criticised for raising the interest rate and placing more strain on mortgage borrowers.
Our view
We think the CAB has missed the point here. Interest rates rise and fall to try to regulate the economy.
In short, those people who come through the CAB’s doors with credit and borrowing problems are likely to be those who contributed to an overheated economy be spending beyond their means in the first place.
We are not unsympathetic to those who have got into trouble with their borrowing, far from it. Lenders have a moral obligation for responsible lending which clearly they may not have. done
Likewise, borrowers have a clear responsibility to borrow sensibly and have adequate life insurance, income protection sickness insurance and redundancy protection, which clearly they have not if their property is being repossessed.
After nine months of difficulty due to job loss or illness, the Department for Work and Pensions would also help with mortgage interest payments, so clearly the public are also not taking action or being poorly advised. If it gets to respossession then people, including their advisers, are not talking.
Useful links:
Learn more about this and related topics in the Mortgage Adviser Channel
Request expert financial advice now
Purchase guidance on financial planning in the Money Shop