New attitude to borrowing needed, says ABI

Posted: 14 Jan 2009 09:56:23 GMT

The government should ensure it promotes a new and more conservative attitude to borrowing instead of simply backing up mortgages with public money, the Association of British Insurers (ABI) has said.

The comments come as a reaction to the government's Homeowners Mortgage Support Scheme, and suggest that responsible borrowing at all times would be a more efficient way of reducing the cost of bad debt in the UK.

"We firmly believe that the right long-term solution is for the insurance industry and the government to work together to encourage responsible borrowing," read a statement from the ABI.

"When people take on debt responsibly, they should only borrow what they can afford to repay from their current income and ensure they have protection insurance in case they lose their income in the future."

The issue is a delicate one, however, as during the 2007 housing boom first-time buyers were priced far out of the market.

Even now, first-time buyers are finding it difficult to obtain a mortgage, making the job of selling a property particularly troublesome.

Homeowners may benefit from selling a property online, however, which could reach a greater number of buyers than traditional estate agents.



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