Action needed to stop rise in repossessions
Action is needed to prevent a rise in mortgage arrears and repossessions, according to a report published yesterday by the Joseph Rowntree Foundation.
The report, Building an effective safety net for home owners and the housing market, argues that although arrears and repossessions are currently low, much of this is due to temporary measures. These include low interest rates, the funding for lending scheme and extensions to support for mortgage interest. The report warns arrears will rise substantially as the economic downturn continues.
The report suggests two models for bringing in a better safety net for homeowners. The first of these is a sustainable home ownership partnership fund to which borrowers, lenders and the government all contribute. The second idea outlined by JRF is an insurance scheme into which homeowners would be auto-enrolled.
The report said: ‘Action needs to be taken now so that a new structure can be put in place to underpin home-buyers and the housing market and in so doing help the wider economy.
‘[The authors] consider that both the sustainable home ownership partnership and auto enrolment options have potential merits as the basis for reform.
‘Without action and with the ending of temporary safeguards we are likely to see rising levels of arrears and possessions in the years to 2015. This in turn will act as a brake on economic recovery and any rise in consumer confidence.’