The Government must intervene to stem the number of people falling behind on mortgage payments after new figures showed court mortgage possession orders have climbed almost 25% since this time last year.
Liberal Democrat Shadow Chancellor Vince Cable says the Government must enforce a "proper" code of conduct to be implemented by mortgage lenders, while the Intermediary Mortgage Lenders Association (IMLA) has called for a revamp of the income support for mortgage interest scheme.
Ministry of Justice figures published today reveal mortgage possession orders made in Q2 2008 were 24% higher than in the second quarter of 2007 and 4% higher than in the first quarter of this year. However, it points out not all court actions result in a repossession.
But the figures follow actual repossession statistics released last week by the Council of Mortgage Lenders (CML), which showed lenders repossessed 18,900 homes in the first six months of 2008, up 41% from 13,400 in the final six months of 2007.
Vince Cable says the MoJ figures suggest the UK is on track for a repossession crisis “very similar to the early 1990s”.
“It is absolutely vital that the Government should intervene and require a proper code of conduct to be implemented by mortgage lenders,” he adds.
“This should not just apply to the big banks but to the large number of secondary lenders who are using court action to pursue their debts in a very aggressive way.
“The Council for Mortgage Lenders code of conduct should be put on a statutory footing for all repossession actions.”
Peter Williams, executive director of IMLA, says: “To avoid possessions for those struggling with their finances because of unemployment or relationship breakdown, the next step is for the government to revamp the income support for mortgage interest scheme.
"Peoples’ homes are now at risk. It’s time for the Chancellor to show his mettle.”
However, Williams says the slowdown in the housing market will be “short and sharp” and is in no way “akin to what we saw back in 1991”.
"Normally a self-correction in the housing market feels like an elastoplast being peeled off very slowly,” he says.
“What we’ve seen over the last twelve months is a quick, sharp rip. That should mean recovery comes more quickly than it has in past housing slowdowns.”
The Ministry of Justice figures show courts have ordered repossessions on 56,173 homes in 2008, although it adds that, of the 39,078 mortgage possession claims issued in the last quarter, 48% of the orders were suspended.
The CML also points out the disparity between its figures and those of the Ministry of Justice, saying the ministry’s figures relate to court activity which may not result in a repossession and that its own statistics concern first-charge lending only.
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