Simon Read: Lenders must not just pay lip service
Saturday 25 April 2009
The Government's much-anticipated Homeowners Mortgage Support Scheme was finally launched this week but only with the support of four of the main banks. Meanwhile, four of the largest lenders Abbey, Barclays, HSBC and Nationwide turned down the opportunity, saying they preferred to make their own arrangements. Why? Sources tell me that the administrative burden of the scheme was too much to bear. The extra paperwork and red tape simply made it
So why did four other banks sign up? The banks concerned are Lloyds (including Halifax), Bradford & Bingley, Northern Rock and Royal Bank of Scotland (including NatWest). What do they all have in common? They're all wholly or partly government-owned so, in fact, they had no option but to support the scheme. On the one hand, it's a good thing that the Government can force banks to toe the line, but the fact that independent lenders chose not to sign up points to the inherent problems with it.
How does it work? Homeowners Mortgage Support will allow eligible borrowers, who suffer a temporary loss of income, to cut their mortgage interest payments for up to two years to help them get back on track with their finances. The Government will underwrite loans, guaranteeing payment if borrowers default. So far, so good.
Lenders that haven't signed up for the scheme say they will offer comparable arrangements to their customers. Let's hope they do. While the Government hasn't been able to force them to support the scheme, it must monitor the rogue lenders' activities to ensure they do offer similar help to struggling lenders.
It's incumbent upon all lenders to help people avoid the misery of repossession. I just trust that this time they're not just paying lip service to the notion, but will actually deliver.
Highs and lows
An interesting discussion that came out of this week's Budget was the seeming definition of "high-earners" as those who get paid more than 150,000. In an age when some footballers apparently earn that amount a week it can seem a paltry sum. But, for most of us, it's unimagined wealth.
The average wage in Britain at the moment stands at 25,100, according to the latest Annual Survey of Hours and Earnings, published by the ONS last November. That means the average worker will take six years to earn 150,000.
If, as some commentators have been bleating, it leads to a new brain drain as those affected seek lower tax environments abroad, then do you know what? good riddance to them. There are plenty of talented people around looking for work right now, not least armies of former bankers.
If a few high-earners do flee the country then that will be good news, as it should create a good number of new highly-paid opportunities for the rest of us. And that's something to drink to, even with an extra penny on a pint.
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