FSA to clamp down on lenders
With the recent downturn in the housing market and the problems being faced by most major lending organisations at the moment, it’s starting to get quite tough for many individuals with a mortgage or other loan secured on their homes. Many people are seeing their monthly repayments remain constant, or in some cases, even increase, despite the fact that the Bank of England has reduced interest rates on three occasions since December last year, whilst at the same time the value of their homes is being eroded by a general slump in the property market. Also, a high percentage of home owners with a loan secured on their property are reaching the end of their current fixed rate deal, with the prospect of their repayments, in some cases, increasing dramatically.
The above factors, coupled with the general slowdown of the UK economy overall, has led to fears of record numbers of repossessions of peoples homes throughout the course of the year. Already, we have seen the number of repossessions increase by 16% for the first quarter of the year, against the same period for last year and the Council of Mortgage Lenders (CML) have predicted that repossessions will reach 45,000 this year, although many experts speculate that this figure is likely to be higher still.
With this in mind, the industry regulator, the Financial Services Authority (FSA) has commenced a review into the repossession practices conducted by lenders. Their main concern is that lenders’ appear to be too eager to commence repossession proceedings against borrowers, rather than treating this course of action as a last resort and the FSA would like to see lenders offering more help and advice to borrowers and take a more lenient approach to those facing difficulty, as set out in the “treating customers fairly” rules.
The FSA is due to publish the first stage of the review in June this year, but for many borrowers who are currently facing financial difficulties on their loans and mortgages, the help can’t come too soon.
