Ministers should consider strengthening the safety net for homeowners struggling to pay their mortgages, a report suggests.
Assistance to this group has put in place in response to the financial crisis will largely be withdrawn by 2022.
Academics, commissioned by lenders ‘ trade body BRITISH Finance, has said that the government should reconsider its position.
However, mortgage applicants must now prove that they have a buffer to manage the money shock and the increase in interest rates. Help to pay
Various systems have been put in place to help those who are facing arrears or, in the end, to the recovery of the possession of their property, if they are facing financial difficulties.
One of the main projects is the support for Mortgage Interest, which helps people on certain benefits, because of their low income, to receive assistance to meet the interest payments on a mortgage loan. The next year, this will be replaced by a loan.
The Universal Credit benefit system, which merges the different working-age benefits, also has less mortgage support for people on low wages or part-time work than the current system of tax credits and other welfare.
The UK Finance report, said: “It is now evident that by 2022, there will be limited financial support from the government for home buyers in distress, and that will be mainly in the form of loans, for those who are not in work.”
Instead, borrowers and lenders should come to an agreement on the mortgage payments.
“The recognition of the relatively open nature of the UK mortgage market and the continuing volatility in the housing market, this report suggests that it would be timely for the government to review the owner’s safety net the situation systematically and comprehensively,” the report concludes.
The low interest rates and a less aggressive stance by lenders have been relatively few people have lost their homes in recent years.
Fewer homes have been repossessed in the last year than in any year since 1982, but lenders have warned that the mortgage rates will not always be so favorable.
Financial information service Moneyfacts, said that even the recent increase in Bank rate of 0.25% to 0.5% has not been felt by the variable mortgage holders, with the average rate increase of 0.14%.
However, it is largely the expectation that mortgage rates will not be less expensive.
In response, the UK Finance report, said: “Households have become very used to take advantage of low and falling mortgage rates, and many have extended their secured and unsecured debt despite static wages. The Bank of England, rightly, reminds us that this poses significant risks.”
Stricter regulation means that mortgage applicants must prove that they can deal with rising interest rates, but the report suggests that this does not cover all of the owners, nor to protect everyone that was a shock, as a sudden drop in income.
He suggests that the Universal Credit could be strengthened to help some of those who are struggling with their mortgage so that in low-wage jobs.