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."

PROMOTED VIDEO
News
Ian Thorpe had Rio 2016 in his sights
people
Arts and Entertainment
Original Netflix series such as Orange Is The New Black are to benefit from a 'substantial' increase in investment
TVHoax announcement had caused outrage
Life and Style
Swimsuit, £245, by Agent Provocateur
fashion

Diving in at the deep end is no excuse for shirking the style stakes

News
One Direction star Harry Styles who says he has no plans to follow his pal Cara Delevingne down the catwalk.
peopleManagement confirms rumours singer is going it alone are false
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Voices
Mrs Brown's Boy: D'Movie has been a huge commercial success
voicesWhen it comes to national stereotyping, the Irish know it can pay to play up to outsiders' expectations, says DJ Taylor
Arts and Entertainment
Curtain calls: Madani Younis
theatreMadani Younis wants the neighbourhood to follow his work as closely as his audiences do
Arts and Entertainment
'Deep Breath' is Peter Capaldi's first full-length adventure as the twelfth Doctor
TVFirst episode of new series has ended up on the internet
Life and Style
Douglas McMaster says the food industry is ‘traumatised’
food + drinkSilo in Brighton will have just six staple dishes on the menu every day, including one meat option, one fish, one vegan, and one 'wild card'
Sport
Mario Balotelli, Divock Origi, Loic Remy, Wilfried Bony and Karim Benzema
transfersBony, Benzema and the other transfer targets
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

Information Security Manager (ISO 27001, Accreditation, ITIL)

£70000 per annum: Harrington Starr: Information Security Manager (ISO 27001, A...

Biztalk - outstanding opportunity

£75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...

Trade Desk Specialist (FIX, Linux, Windows, Network Security)

£60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...

Service Desk Analyst (Windows, Active Directory, ITIL, Reuter)

£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...

Day In a Page

Iraq crisis: How Saudi Arabia helped Isis take over the north of the country

How Saudi Arabia helped Isis take over northern Iraq

A speech by an ex-MI6 boss hints at a plan going back over a decade. In some areas, being Shia is akin to being a Jew in Nazi Germany, says Patrick Cockburn
The evolution of Andy Serkis: First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes

The evolution of Andy Serkis

First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes
You thought 'Benefits Street' was controversial: Follow-up documentary 'Immigrant Street' has got locals worried

You thought 'Benefits Street' was controversial...

Follow-up documentary 'Immigrant Street' has got locals worried
Refugee children from Central America let down by Washington's high ideals

Refugee children let down by Washington's high ideals

Democrats and Republicans refuse to set aside their differences to cope with the influx of desperate Central Americas, says Rupert Cornwell
Children's books are too white, says Laureate

Children's books are too white, says Laureate

Malorie Blackman appeals for a better ethnic mix of authors and characters and the illustrator Quentin Blake comes to the rescue
Blackest is the new black: Scientists have developed a material so dark that you can't see it...

Blackest is the new black

Scientists have developed a material so dark that you can't see it...
Matthew Barzun: America's diplomatic dude

Matthew Barzun: America's diplomatic dude

The US Ambassador to London holds 'jeans and beer' gigs at his official residence – it's all part of the job, he tells Chris Green
Meet the Quantified Selfers: From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor

Meet the 'Quantified Selfers'

From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor
Madani Younis: Five-star reviews are just the opening act for British theatre's first non-white artistic director

Five-star reviews are just the opening act for British theatre's first non-white artistic director

Madani Younis wants the neighbourhood to follow his work as closely as his audiences do
Mrs Brown and her boys: are they having a laugh?

Mrs Brown and her boys: are they having a laugh?

When it comes to national stereotyping, the Irish – among others – know it can pay to play up to outsiders' expectations, says DJ Taylor
Gavin Maxwell's bitter legacy: Was the otter man the wildlife champion he appeared to be?

Otter man Gavin Maxwell's bitter legacy

The aristocrat's eccentric devotion to his pets inspired a generation. But our greatest living nature writer believes his legacy has been quite toxic
Joanna Rowsell: The World Champion cyclist on breaking her collarbone, shattering her teeth - and dealing with alopecia

Joanna Rowsell: 'I wear my wig to look normal'

The World Champion cyclist on breaking her collarbone, shattering her teeth - and dealing with alopecia
Bill Granger recipes: Our chef gives raw ingredients a lift with his quick marinades

Bill Granger's quick and delicious marinades

Our chef's marinades are great for weekend barbecuing, but are also a delicious way of injecting flavour into, and breaking the monotony of, weekday meals
Germany vs Argentina World Cup 2014 preview: Why Brazilians don't love their neighbours Argentina any more

Anyone but Argentina – why Brazilians don’t love their neighbours any more

The hosts will be supporting Germany in today's World Cup final, reports Alex Bellos
The Open 2014: Time again to ask that major question - can Lee Westwood win at last?

The Open 2014

Time again to ask that major question - can Lee Westwood win at last?