Repossessions 'in nobody's interest'

Posted: 14 Nov 2008 10:29:35 GMT

It is in nobody's interest for mortgage lenders to repossess properties in the current market.

That was the bold claim made by the Homeowners Advice Centre, an organisation providing free advice on consumer debt issues.

It suggested that there are a number of options open to both lender and borrower; banks can offer reduced repayment terms in order for a larger equity stake while homeowners can choose to sell up, repay the bank and start afresh.

Al Elliot, advisor at the HAC, suggested: "Lenders still ‘own’ the asset - the house - which everyone knows, in the long term, will recover its value so the last thing [they] want to do is to try to sell in today's market."

He added that taking a larger equity stake will not be a problem for banks even if the house is in negative equity so long as they "sit back and wait" for the property market to recover.

Recently, the Council of Mortgage Lenders predicted that as many as 45,000 homes will be repossessed in 2008, equivalent to 0.38 per cent of the UK's total housing stock.

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