Government moves on mortgage lending and repossessions
December 29, 2008
Following the pre-budget report, it has been announced that the government is to set up a new review panel that will monitor lending to businesses and consumers. The announcement came from the Chancellors, Alistair Darling, shortly after a report from Sir James Cosby, who said that urgent government intervention was needed to stop the mortgage market from shrinking further in 2009.
New initiatives also include a new three month window before repossession proceedings begin, with major lenders agreeing to wait at least three months after the homeowner falls into arrears before starting proceedings, although some lenders already waiting at least three months anyway. This could help to reduce the number of repossession by extending the time that the homeowner has to come to some agreement with the lender or find a suitable solution.
Former banker Sir James Crosby was commissioned by the government to look at ways in which to try and breathe life back into the mortgage market.
He said: “No new net mortgage lending across a full calendar year would be unprecedented and is likely to be associated with further weakness in consumer spending and an increase in unemployment. In the housing market it is difficult to see why this would not also involve further house price falls and fewer housing starts.”
Following the announcement of the plans an official from the Council of Mortgage Lenders said: “Everything announced today is helpful, if modest. But it is vital to recognise that not all lenders are the same, and not all have received support from the government’s interventions in what remains a very difficult financial and economic environment.”
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