Forum Brief: Mutual Advice

Housing charity Shelter and the Building Societies Association have published a new guide to advise people about how to deal with mortgage arrears.

Forum Response: Shelter

Ben Jackson, director of external affairs at Shelter, said: "There is a worrying contradiction between what people think they will do and what they actually do when faced with mortgage arrears.

"I hope the information given in this guide encourages people to ask for help quickly and make that all important first step on the path to keeping their home.

"The dramatic fall in mortgage arrears and repossessions is enormously reassuring for home owners, but the 110,000 mortgages currently in arrears is likely to cause serious anxiety for those involved.

"Having difficulty paying for your home is a particularly stressful and traumatic experience - there is a real fear that it could ultimately lead to the devastating outcome of homelessness."

Forum Response: Building Societies Association

Adrian Coles, director general of the BSA, said: "The BSA is very pleased to be launching Mutual Advice with Shelter. Building societies do not want to repossess people's homes, and will do everything they can to reschedule payments and help someone organise their finances.

"During that first call to their building society, it is important for the mortgage arrears process to be two-way, with the customer being totally honest about their financial situation.

"I hope this report goes some way to reassuring people that admitting there is a problem will not automatically result in the loss of their home."

Forum Response: Council of Mortgage Lenders

Michelle Vosper, public affairs manager at the CML, told ePolitix.com: "The continuing reduction in arrears and possessions is obviously good news. But at the same time it makes sense to plan ahead for a less benign economic environment. This is what the CML is doing. Without scaremongering, we want to make sure that borrowers are encouraged to adopt sensible measures to reduce their risk of mortgage arrears in the future. There is no difference here between the interests of borrowers and lenders, as both benefit from a sustainable home-ownership market where risk is properly managed.

"We urge the government, the FSA, lenders and borrowers themselves not to lose sight of the fact that personal borrowing is standing at very high levels. It makes sense for borrowers to think about how they can offset the risks they face, even in a low interest rate environment.

"We are discussing with the FSA the best way of ensuring that all mortgage borrowers receive a consistent message about risk, supported by clear information about how to manage it, as part of the new structure of mortgage regulation.

"We do not foresee major problems in the near future. But interest rates are expected to rise next year, albeit modestly, and economic uncertainty remains. Against this backdrop we would urge all borrowers, and especially those who have bought recently and carry high levels of debt, to ensure that they are building in enough flexibility to their household finances to be able to cope with higher mortgage payments."