The report, 'A joined-up approach to helping mortgage borrowers¹', is designed to provoke discussion and sets out a number of recommendations on insurance, flexible tenure, lender forbearance and government schemes.
The cost of repossession to families, lenders and the Government is high, both in monetary and emotional terms. The Government has an important role to play preventing repossession, but so do others including lenders, insurers and advice agencies. These groups must work together to reduce the affliction of repossession.
The BSA is launching this report to coincide with the political party conferences and will be debating this issue at fringe events² jointly run with the Money Advice Trust.
Report conclusions and recommendations
- Government should actively encourage the take-up of insurance which would help pay a consumer's mortgage in the event that they become unable to.
- The Government was right to discontinue Homeowner Mortgage Support and to retain Support for Mortgage Interest (SMI) but it should examine whether the provision of SMI could be extended so that more people are eligible for help.
- Forbearance by mortgage lenders has worked well for consumers to prevent repossessions. However, the separate regulatory structures for first charge, second charge and unsecured lending is confusing for consumers and leads to varying requirements on forbearance. This should be changed so that it provides clarity for consumers and lenders alike.
- Shared equity schemes may have a place for preventing repossessions, but further investigation is needed into how homeowners could 'staircase' the amount of equity in their property up or down depending on their circumstances.
Paul Broadhead, BSA Head of Mortgage Policy, commented:
"It is clear that there is no silver bullet to eliminate repossessions. Instead we need a framework of solutions, which together can help as many mortgage borrowers as possible to remain in their homes.
"Consumers get into difficulty meeting their mortgage repayments for a variety of reasons, in many cases it is caused by an unexpected life event, such as job loss or relationship breakdown.
"It is easy when reading statistics on repossessions to lose sight of the fact that each one represents a family who have lost their home. This is why the BSA is urging the industry, the Government, and other stakeholders to work together to help those at risk of losing their home."
