Cable sees a 'repossession time bomb'

01/07/2009

Liberal Democrat shadow chancellor Vince Cable warned yesterday that the housing market faces a repossessions "time bomb".

The comments come in the wake of new government figures, showing that the flagship Mortgage Rescue Scheme has helped just six UK households by the end of May.

This is up from two at the end of April - well down on the stated aim that the multi-million programme would benefit 6,000 households who had fallen behind on their mortgage payments.

The Mortgage Rescue Scheme works by cutting these payment levels in homes at risk of repossession.

Meanwhile, the effects of the recession are likely to push home repossessions numbers up from last year's 40,000 towards 65,000, according to forecasts from the Council of Mortgage Lenders.

Mr Cable said: "Helping just six families is absolutely pitiful and doesn't even begin to address the scale of the problem. Vast reams of red tape stand in the way of families faced with repossession staying in their own homes."

He added: "Repossession is a ticking time bomb ... the numbers of repossessions are likely to soar in the next two years because of rising unemployment."

Mr Cable also said that the Mortgage Rescue Scheme suffered from "time lags" in the assistance it offered.

"It is not just unemployment that is causing problems for those without some form of income protection insurance, loss of income generally is a major factor and has become EuroDebt's number one reason for people joining a Debt Management Plan in the last six months," EuroDebt director Kevin Still added.

"Over 20 per cent of EuroDebt's new homeowner clients have mortgage arrears and this is one of our early priorities to deal with. The reality is that effective negotiation with creditors using independently prepared income & expenditure analysis is the most effective way of finding an amicable solution that is in the best interest of the homeowner. Early contact with the creditor is important and they want to see that a holistic approach has been taken to the household finances, including unsecured creditors."

Tags; Housing Debt and Bills, Young Family Finances,

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