Government under fire over mortgage moves

The Government's response to the mortgage lending crisis has been confused and ineffective critics warn, with calls for new solutions gathering pace as repossessions rise and mortgage lending figures continue to plummet.

The Council of Mortgage Lenders (CML) estimates that there was £258bn worth of gross mortgage lending in 2008, down dramatically from £363bn last year.

In his pre-Budget report last month Chancellor Alistair Darling announced that mortgage lenders will now have to wait three months before beginning repossession proceedings against borrowers, and RBS said this week that it would not begin the process for six months. But speaking to the CML Annual Conference yesterday, Liberal Democrat Treasury spokesman, Vince Cable, said: "The existing proposals on repossessions are woefully inadequate; the Government's mortgage rescue plans cover only 6,000 households, according to the CML, despite the fact that 170,000 households are estimated to have been in arrears for more than three months."

"The Government must not duck its responsibility" Cable continued. "It must appoint directors to the nationalised and semi-nationalised banks and clearly set out how these banks should operate. The centrepiece of the Government's strategy must be to maintain lending to British companies to keep the economy going.

He warned that the focus must now be on building innovative solutions to the lending crisis. "The industry should now be exploring new products to restore faith in mortgage lending," he said. "One option for providing safe, simple and cheap mortgages would be to insure them through the market for the first 5 years to cover all but deposits."

But Jon Pain, managing director for retail markets with the Financial Services Authority, also warned that lenders themselves must concentrate on treating customers fairly when they go into payment arrears in a bid to help combat growing repossession concerns.

"We want each lender to … review current practice to ensure corners are not being cut, and to only take repossession action where all other reasonable attempts to resolve the position have failed."

"There are difficult questions facing us about the future of the mortgage market," he added. "It is unlikely to be anything like the recent past. Now is the right time for us to address the big issues... learning from the past, and making sure that we get a more sustainable market in the future - where lenders have adequate liquidity, funding and capital; there are strong systems; and customers enjoy the benefits of a vibrant market but are not exposed to unnecessary risk."

He warned that the focus must now be on building innovative solutions to the lending crisis. "The industry should now be exploring new products to restore faith in mortgage lending," he said. "One option for providing safe, simple and cheap mortgages would be to insure them through the market for the first 5 years to cover all but deposits."

But Jon Pain, managing director for retail markets with the Financial Services Authority, also warned that lenders themselves must concentrate on treating customers fairly when they go into payment arrears in a bid to help combat growing repossession concerns.

"We want each lender to... review current practice to ensure corners are not being cut, and to only take repossession action where all other reasonable attempts to resolve the position have failed."

"There are difficult questions facing us about the future of the mortgage market," he added. "It is unlikely to be anything like the recent past. Now is the right time for us to address the big issues... learning from the past, and making sure that we get a more sustainable market in the future - where lenders have adequate liquidity, funding and capital; there are strong systems; and customers enjoy the benefits of a vibrant market but are not exposed to unnecessary risk."

Start your day with The Independent, sign up for daily news emails
News
newsAnother week, another dress controversy on the internet
Life and Style
Scientist have developed a test which predicts whether you'll live for another ten years
health
Life and Style
Marie had fake ID, in the name of Johanna Koch, after she evaded capture by the Nazis in wartime Berlin
historyOne woman's secret life as a Jew in wartime Berlin
News
news... and what your reaction to the creatures above says about you
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: A Customer Service Advisor is r...

Ashdown Group: Trainee Consultant - Surrey / South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

SThree: HR Benefits Manager

£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

Day In a Page

Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot
Poldark star Heida Reed: 'I don't think a single bodice gets ripped'

Poldark star Heida Reed

'I don't think a single bodice gets ripped'
The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
Tony Oursler on exploring our uneasy relationship with technology with his new show

You won't believe your eyes

Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

Moores must go. He should never have been brought back to fail again

The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn