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
PROMOTED VIDEO
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

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Recruitment Genius: Technical Report Writer

£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...

MBDA UK Ltd: Indirect Procurement Category Manager

Competitive salary & benefits!: MBDA UK Ltd: MBDA UK LTD Indirect Procurement...

Day In a Page

Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

Isis hostage crisis

The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Maverick artist Grayson Perry backs our campaign
Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

The runaway buccaneers and the ship full of gold

Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

Assisted Dying Bill: 'I want control of my life'

This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
Move over, kale - cabbage is the new rising star

Cabbage is king again

Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
11 best winter skin treats

Give your moisturiser a helping hand: 11 best winter skin treats

Get an extra boost of nourishment from one of these hard-working products
Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

Paul Scholes column

The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Frank Warren column: No cigar, but pots of money: here come the Cubans

Frank Warren's Ringside

No cigar, but pots of money: here come the Cubans
Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee