A flood of repossessions in the UK property market in 2009 will depress the real estate market even further and put off recovery for longer, a leading housing expert claims.
Steve Wilcox, of the Centre for Housing Policy at the University of York and author of the recently published UK Housing Review 2008/09, is urging the government to do more to help those in danger of having their property repossessed.
He said mortgage rescue plans were important but even more vital is preventing and holding back repossessions.
‘Forbearance is far more critical than mortgage rescue. If there is a flood of repossessions, this will depress the property market further and put off recovery further,’ said Professor Wilcox.
Major lenders have agreed not to start repossession action until three months after borrowers have fallen into arrears and some have even extended that to six months but more is needed to make home owners aware of what help is available.
The government’s Homeowner Mortgage Support Scheme where borrowers losing their jobs can defer interest rate payments for two years, for example, will only work if people sign up, he said.
The problem is those that do not sign up for the scheme. ‘Hopefully the scheme will be successful if levels of repossession can be held back. But subprime lenders need to sign up,’ he explained.
He called for the measures outlined in the Crosby Report which calls for more government guarantees of mortgage lending to be brought forward. ‘The government must do something now, it needs urgency,’ he said.
He also called for new products to aid borrowers such as a return of mortgage indemnity guarantee (MIG) policies. The insurance covers the lender from loss in the event of a borrower defaulting, moving the exposure to loss to the insurance industry.
