Repossessions will soar if rates rise, warns Banks
Wednesday, 29 June 2011 12:19 PM
House repossessions are likely to soar as soon as interest rates start to rise, according to the head of the bank established to deal with Northern Rock’s toxic assets.
Richard Banks, CEO of UK Asset Resolution, revealed in the Guardian this week that of his organisation’s 750,000 customers, 23,000 mortgage holders are more than six months behind with payments.
Banks advocated a ‘tough love’ approach, saying: “If you can't afford your mortgage, you are only increasing your indebtedness. If we allow you to increase your indebtedness, that's not really fair to you."
Responding to Banks' comments on rising rates, Citizens Advice chief executive Gillian Guy said a policy of ‘tough love’ would be short-sighted and unhelpful.
“Of course there will be cases where homeownership is unsustainable, but in that situation it is vital that those affected are helped out of home ownership in an orderly way and that they can get into secure rented accommodation with the least disruption possible. This is the key challenge for lenders and government.
“When lenders were not treating people fairly and failing to show forbearance, repossession proceedings were started when people were only a couple of months in arrears. Since then lenders have done a good job with customers facing difficulties but we are now starting to see poor practice creep back in.”
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