Lib Dems to help home owners facing repossession

Natalie Holt
27-Aug-2008
The Liberal Democrat's have outlined proposals to help home owners facing repossession.
The plans look at several different approaches to tackling the dual problems of high repossession levels and the lack of social housing stock.

The proposals include the introduction of regulated mortgage rescue schemes, to enable home owners to sell all or part of their equity then rent it back from a housing association or private firm.

Other plans involve allowing local authorities to borrow money to buy land and empty new homes for social housing, and issuing guidelines to courts to only allow homes to be repossessed in extreme circumstances.

A recent report from Standard & Poor’s reveals that sub-prime borrowers in particular are struggling to pay off their mortgages.

The total delinquency index for UK non-conforming residential mortgage-backed securities has seen a 23.31% increase in arrears for Q2 2008 compared to the previous quarter.

A separate report from S&P shows that prime borrowers are also suffering to a lesser extent, with the total number of non-payments climbing to 2.94% in Q2 2008 from 2.33% the previous quarter. Missing payments for over 90 days were also up from 0.92% to 1%.

Vince Cable, shadow chancellor for the Liberal Democrats, says: “The government seems obsessed with fighting a losing battle to artificially prop up the housing market, rather than finding ways to deal with its worst effects.

“These plans could be funded using money already committed to social housing but currently unspent because of the collapse of new building. They would also save taxpayers the cost of re-housing the homeless without going down the disastrous route of giving open-ended guarantees for new mortgage lending.”