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Repossession and Mortgage Arrears

I agree with the hon. Gentleman. I hope that I have signed his early-day motion. If I have not, I will do so. He makes a good point, to which I will come shortly. It is true that the majority of judges seem to be taking the matter seriously, but not all are. There are many gaps in the protocol, and I will elaborate on that in a few moments. The other trend to which it is worth referring is the growth in negative equity. In a perverse way, that is helping to alleviate the problem of repossessions because, as long as banks and other lenders can see that there is negative equity, they are less likely to repossess property on which they will make a loss. In the short term at least, market forces alleviate the problem, but negative equity is a major issue that is growing. Some interesting figures produced at the beginning of last week by the credit agency Fitch estimate that currently about 10 per cent. of home buyers are in negative equity, and in some parts of the country—the midlands and city centres such as Birmingham, Manchester and elsewhere—the figure is probably up to 30 per cent. That is according to a narrow measure, which does not take any account of sub-prime lending. A wider measure that takes account of negative equity in relation to actual loans suggests that 15 per cent. of loans are in negative equity. That is at a time when the housing market has not yet adjusted to the level that many analysts and, I think, the Government themselves consider likely: a 30 per cent. fall from the peak. On average, we are currently talking only about a 20 per cent. fall. The market suggests that it is likely that negative equity could well increase in severity. When that happens, further problems will build up. The figures that I have mentioned exclude the extreme problems of the sub-prime mortgage market, which we have in this country as well as in the United States. Analysis by organisations such as Shelter and Citizens Advice suggests that there are probably about 750,000 sub-prime mortgages out there. Some 20 per cent. of the borrowers of those mortgages are seriously struggling. I was horrified to see that 40 per cent. of all sub-prime borrowers resort to other forms of borrowing, such as credit cards, to maintain their mortgage payments. A big, subterranean arrears problem is building up which is not captured in the figures of the more reputable mainstream lenders.