Julian Knight: Mortgage rescue? Save us from false promises
Struggling borrowers are being invited to put their faith in a government scheme hatched in haste and providing no details
Sunday 07 December 2008
Fresh from bailing out the banks, Gordon Brown, Peter Mandelson and Alistair Darling are fast becoming addicts to the opiate of intervention. Every other day, it seems, the banking bigwigs are being told what the Government wants them to do next. They should probably apply for a Whitehall parking pass for their chauffeur-driven Mercs, they are there so often.
No bad thing, you may say – they got us into this mess in the first place (even if we as consumers weren't forced to borrow so much money), so why shouldn't Labour order the banking bosses about?
And fair enough, this column has long been arguing that action on repossessions needed to be taken by the Government and regulators. After all, people have been losing their homes too quickly and have been charged unfair fees for going into arrears. Some banks have been sheer bloody minded, for instance preventing homeowners from converting their mortgage to interest only temporarily.
In the past few weeks, we've had big lenders signing up to what amounts to a code of conduct on repossession. Northern Rock – a serial offender when it comes to seizing people's homes unnecessarily – and Royal Bank of Scotland now say they won't repossess until six months of arrears have been clocked up.
We have also heard the Financial Services Authority saying it will come down on lenders that don't "treat their customers fairly".
Therefore, it was a welcome move by the Government last week to bang the heads of the UK's biggest eight lenders together and get them to agree to its mortgage rescue scheme, under which the Government will underwrite missed repayments. But I fear that the initiative could be more style than substance. I know that is the way with politics – and Labour has one eye on a potential early election – but these are people's homes we're talking about. If the scheme doesn't meet expectations, it will be as cynical a political act as I can remember.
After the announcement, I received an email from a reader who has been battling repossession. The tone was one of relief: he thought the mortgage scheme would provide a breathing space while he got back into work. Two days later and the relief had gone: his lender had told him the details of the scheme were undecided and repossession would proceed.
No one is sure how the scheme will work in practice. Will you have to be in receipt of benefits? How can you prove you are doing everything you can to pay the mortgage? What if you have even small savings? How do you show that your earnings have fallen enough to qualify for help? Are all lenders going to apply the same rules, or will it be on a case-by-case basis? And if it's the latter, as seems likely, how will fairness be ensured? Will it depend on something as random as how you get on with the bank worker at the other end of the phone line?
There are questions galore and few answers because the scheme was drawn up in double-quick time, presumably so the Tories could be wrong- footed. The banks had a maximum two days' notice and now some are grumbling privately that they were bounced into agreeing. What's more, the deal only covers 70 per cent of the market, so what about the other 30 per cent? Many of the repossessions are, after all, being brought by sub- prime and remortgage lenders that aren't in on this scheme. There is a risk that after the initial "hit" of the rescue announcement, many borrowers will be left to go cold turkey.
Independent Partners: Get fee-free expert mortgage advice and find the right mortgage deal for you.
As Voltaire once said, “Ice cream is exquisite. What a pity it isn’t illegal”
How to protect your assets if the stock markets begin to head south again
Child Maintenance Service to replace Child Support Agency - but is it better?
A student's guide to financial survival: You don't have to drown in debt at university
Bargain Hunter: Kit yourself out in sports gear - at a healthy discount of up to 75%
The HiFX guide to managing corporate foreign exchange and international payments
- 1 'Alien thigh bone' on Mars: Excitement from alien hunters at 'evidence' of extraterrestrial life
- 2 Mother fed her daughter tapeworms to make her skinny for pageant
- 3 Crystal Palace next manager latest: Palace consider Ally McCoist - EXCLUSIVE
- 4 Richard Dawkins on babies with Down Syndrome: 'Abort it and try again – it would be immoral to bring it into the world'
- 5 ALS ice bucket challenge co-founder Corey Griffin drowns, aged 27
Richard Dawkins on babies with Down Syndrome: 'Abort it and try again – it would be immoral to bring it into the world'
Scottish independence: English people overwhelmingly want Scotland to stay in the UK
Isis threat: Cameron wants an alliance with Iran
Michael Brown shooting: Chaos erupts on the streets of Ferguson after autopsy shows teenager was shot six times – twice in the head
Disgusting, frustrating, but intriguing: how the country really feels about its politicians
Bin bag full of cats' heads discovered near Manchester's Curry Mile
iJobs Money & Business
Negotiable: Harrington Starr: Market Administrator (1st line Support, Trade Fl...
£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...
Negotiable: Harrington Starr: Data Support Analyst (Linux, Solaris, Windows Se...
Negotiable: Harrington Starr: Helpdesk Support Engineer (Windows, MS Office, E...
Day In a Page
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony