'Merciless mortgage lenders' slammed

05 August 2008

Shelter chief executive Adam Sampson has condemned ‘merciless mortgage lenders’ in the light of a new report on repossessions and mortgage arrears from City watchdog the Financial Services Authority (FSA).

The report, drawn from data on mortgage lending from FSA regulated firms, makes bleak reading for homeowners. It has led the authority to call for fairer treatment of customers in the current market climate.

The new figures show:

mortgage possessions grew significantly in late 2007 and early 2008, with 9,152 new cases in the first three months of 2008, a rise of over 40% on a year earlier.
54,000 borrowers fell behind on repayments in the first three months of 2008, bringing the total number of mortgages in arrears to 302,000.
the total number of loans in arrears is 15% higher than the figure for the first three months of 2007, showing that borrowers who get into difficulties are finding it harder than ever to catch up with repayments.

The FSA found evidence that some lenders were failing to consider borrowers circumstances, and were quick to take court action where they should have been using repossession as a last resort. They also found that unfair charges were being levied on troubled homeowners.

In response to the figures, Shelter’s chief executive Adam Sampson said:

‘Today’s figures show we can no longer cross our fingers and hope this is a blip - we have now reached crisis point in the number of people at risk of repossession and alarm bells must be ringing in Government.

‘We believe these new figures paint a terrifying picture showing real people - hard working families, young first time buyers and even renters - all living in the shadow of repossession and ultimately homelessness.

‘At Shelter we see many homeowners owing very small amounts of money, whose lives are wrecked by some, particularly sub-prime, lenders racing to repossess.

‘We are particularly concerned by the report’s new evidence that there is a huge disparity in lending and arrears management practices which leave many homeowners at risk of repossession in cases where a solution could have been found.

‘The FSA’s call for fair treatment of customers is a good first step, but as the regulator it must now put its money where its mouth is and clamp down on merciless mortgage lenders who are robbing people of their homes.’