BSA: A joined-up approach is needed to help mortgage borrowers in difficulty
The Building Societies Association (BSA) today publishes a report to urge Government, the industry and consumer groups to work together to help prevent home repossessions.
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." ~ Ends ~
Notes to editors
1. A copy of 'A joined-up approach to helping mortgage borrowers' can be viewed here http://www.bsa.org.uk/docs/publications/helping_mortgage_borrowers.pdf It is the third and final report in a series by the BSA, which examined how to help borrowers struggling to meet their mortgage payments. The first report, 'Long term safety nets to protect mortgage borrowers', was published in November 2010. It was written by John Howard, former chair of the Financial Services Consumer Panel and presenter of You and Yours on Radio 4. It set out initial ideas on how repossessions could be prevented. The second report, published in January 2011, was a compilation of government, industry and stakeholder views on helping mortgage borrowers – both reports can be viewed here http://www.bsa.org.uk/publications/industrypublications/long_term_safety_nets.htm.
2. The BSA is holding fringe events with the Money Advice Trust at the three main political party conferences. Details of all the BSA's events can be found here http://www.bsa.org.uk/mediacentre/pa_update/1_public_affairs/public_affairs_update.htm
3. The BSA and the Money Advice Trust have published a booklet outlining what mortgage borrowers should do if they are unable to repay their mortgage – Can't Pay Your Mortgage?
http://www.bsa.org.uk/consumer/factsheets/arrears_leaflet.htm
4. The Building Societies Association (BSA) represents mutual lenders and deposit takers in the UK including all 48 UK building societies. Mutual lenders and deposit takers have total assets of over £365 billion and, together with their subsidiaries, hold residential mortgages of almost £235 billion, 19% of the total outstanding in the UK. They hold more than £245 billion of retail deposits, accounting for 22% of all such deposits in the UK. Mutual deposit takers account for about 36% of cash ISA balances. They employ approximately 50,000 full and part-time staff and operate through approximately 2,000 branches.
5. Photographs of Paul Broadhead are available from the BSA press office, from the Association's website at www.bsa.org.uk or Headlinemoney www.headlinemoney.co.uk
Katie Wise (née Errington)
Policy and External Affairs Officer
Building Societies Association
6th Floor, York House
23 Kingsway
London
WC2B 6UJ
Tel: 020 7520 5904
Email: katie.wise@bsa.org.uk
Web: www.bsa.org.uk
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