In Focus Consumer Credit
The disappearing ‘safety net’ for home-owners
Changes in regulation may leave home-owners more exposed, a new report has found
June Deasy Head of mortgage policy, UK Finance
Our new report, Challenges for our Home Ownership Safety Net: UK and International Perspectives, which was published last month reveals the extent to which help, or a ‘safety net’, for home-owners, who may be facing financial difficulty, has been scaled back over the past decade.
Further reduction Following the 2008 financial crisis, the government strengthened the safety net for home-buyers, but most of this support has now been withdrawn. Our key findings include:
l Support will be further reduced in April 2018, when the government is due to stop paying Support for Mortgage Interest as a grant, and replace it with a new, and less generous, form of support: Loans for Mortgage Interest, repayable when the house is sold off and transferred to a new home-owner. l By 2022 help for home-owners in financial difficulty will be limited mainly to loans to those who do not work. For people with a job – even in part-time or low-paid employment – the system will rely largely on what individual home-owners can do for themselves, supported by lenders operating within the legal and regulatory safeguards. The report is the work of three housing
academics. Their analysis explores how the safety net for borrowers in financial difficulty has been eroded in the UK and compares it with other countries. It reveals that, while many nations do not provide support specifically for mortgage borrowers, in some cases this is because they already have more generous income-support measures in place.
January 2018
There has also been additional regulation
to reinforce economic stability and limit risks posed by financial institutions.
While many nations do not provide support specifically for mortgage borrowers, in some cases this is because they already have more generous income-support measures in place
In countries where mortgage markets have
suffered badly because of the financial crisis and subsequent recession, governments have often responded with emergency policies to reduce evictions, modify mortgage terms, transfer homes into the rental sector, and provide other support.
www.CCRMagazine.co.uk
Significant changes As this research highlights, there have been significant changes in the benefit system affecting home-owners. It is important that they are aware of these changes and how they may be affected. There is a key role for the government
and the forthcoming Single Financial Guidance Body in ensuring these changes are as widely understood as possible. Lenders have responsibilities to help
manage the consequences of diminishing support for home-owners in difficulty. They will always work with borrowers to help them manage a period of temporary difficulty, and avoid possession wherever possible. CCR
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