CML rejects Shelter allegation that reckless lending led to repossessions
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The Council of Mortgage Lenders has hit out at Shelter’s claim that 17,000 repossessions could have been prevented if lenders had been more responsible.
Figures from the Financial Serv-ices Authority last week show repo-ssessions reached a three-year low in Q4 of 2010. The number of new repossessions in the quarter con-tinued to decline, decreasing by 10% to 8,246 - the lowest figure for three years.
But the number of new arrears cases in Q4 was 38,800, which is 6% higher than Q3.
On the day the results were rel-eased, housing charity Shelter claimed that had the Mortgage Mar-ket Review been in place over the past five years, 17,000 properties would not have been repossessed.
It says under the MMR rules, vulnerable home owners would not have been lent huge sums of money they could not pay back, which would have prevented them from falling into arrears because they could not keep up the high mortgage payments.
But the CML says it is surprised and disappointed by Shelter’s research.
Michael Coogan, directorgeneral of the CML, says: “The CML and members strongly support respon-sible lending and it is mis-leading of Shelter to suggest that lenders are opposed to this objective because we oppose FSA proposals which would have serious unintended consequences.
“The concerns lenders have rel-ate not to the principle of requiring responsible lending, but to the de-tail of the rules to implement it, which as drafted in the original MMR proposals go too far and would needlessly exclude too many good borrowers.”
But Campbell Robb, chief executive of Shelter, claims its research shows just how much the mortgage market has failed to protect con-sumers, leading to thou-sands needlessly going through the nightmare of repossession.
He says: “Reckless lend-ing over the last few years, which saw some lenders giving out loans of more than 100% of the value of the property and up to 7 x borrowers’ salaries, helped fuel the increase in arrears and repossess-ions, not to mention the unsustain- able house price bubble.”
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