Mortgages: Repossession Orders
Work and Pensions
Anna Soubry (Broxtowe, Conservative)
To ask the Secretary of State for Work and Pensions what discussions he has had with the banking sector to ensure that people adversely affected by changes in support for mortgage interest rate are not placed at immediate risk of having their homes repossessed.
Steve Webb (Minister of State (Pensions), Work and Pensions; Thornbury and Yate, Liberal Democrat)
We have discussions from time to time with the Council of Mortgage Lenders about support for mortgage interest. When we changed the standard interest rate to its current level of 3.63% in October 2010, the Council of Mortgage Lenders told the Department that it expects lenders to continue to exercise forbearance where it is fair to do so for the borrower, and the borrower has a chance of paying off any arrears in the future. The Council of Mortgage Lenders has told us that where arrears levels increase for some borrowers as a result of the change in the standard interest rate this does not necessarily translate into an immediate possession risk.
We have made clear our expectation that lenders should continue to offer support and forbearance to their customers who are struggling with their mortgage repayments.
Lenders are required to consider what they can do to prevent borrowers losing their homes. Under the Pre-Action Protocol, lenders must prove they have considered all other options before trying to repossess a property. For example, they may agree to change or lengthen the term of the loan, accept reduced payments in the short term, or add the debt to the amount borrowed.