Safety nets failing to protect homeowners
Sub-prime lenders are using heavy handed approaches in order to manage borrowers who are falling into arrears. This, coupled with bad advice from brokers as well as irresponsible lending decisions, is making things a lot harder for some borrowers. Many of the regulatory safety nets set up by the Financial Services Authority (FSA) are failing to protect borrowers who are vulnerable to bad debt.
The Citizens Advice (CA) are calling for a pre-action protocol to be put in place in order to ensure that court action against borrowers is used only as a last resort. The CA is also calling for the a new housing benefit for homeowners to be established to provide tenants who are on low incomes.
The Intermediary Mortgage Lenders Association (IMLA) claims that in calling for these new safety nets the CA has ignored the underlying strengths of the mortgage market in the UK.
The recommendations by the CA comes after figures were just released showing that borrowers’ ability to afford a new home have reached their lowest levels since 1992 when the UK was in the grip of a recession.
The Council for Mortgage lenders has released a report in which it claims that the proportion of first time buyers’ take home pay spent on servicing their mortgages went up to 20.6% from 20.4% by the end of last year.
If you are having trouble repaying your home loan make sure you talk to your lender and see if you can come to some sort of repayment agreement before putting yourself at risk of repossession.