Breathing Space
Borrowers who fail to maintain mortgage repayments will be given a six-month breathing space under a plan due to be announced today by the Royal Bank of Scotland.
The bank, which owns NatWest, is expected to promise not to repossess homes for six months from the date when customers first admit that they have a problem, The Times has learnt.
Repossessions have soared in recent months as the past year’s vicious financial squeeze on homebuyers has combined with rising unemployment, leaving many struggling to pay their mortgage.
In the third quarter, the number of people to have their homes repossessed leapt by 12 per cent, with 11,300 properties recovered between July and September — up from 10,100 in the second quarter, according to the Council of Mortgage Lenders.
About 168,000 borrowers are at least three months in arrears on their home loans, marking an 8 per cent rise since the end of June, the council said. It predicts a total of 45,000 repossessions this year and some economists say as many as 100,000 homes could be repossessed over the next year. The previous record was set in 1991, when the figure topped 75,000.
According to one source close to the bank, it recognised that seizing properties and auctioning them would only worsen the problem of plunging house prices. Falling prices are sending millions of recent homebuyers into “negative equity” — where their homes become worth less than the mortgage.
www.thetimesonline.co.uk
(Monday, December 1, 2008)