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Housing and the Credit Crunch

That is certainly probable. It is a matter of concern that nobody seems to know the answer one way or the other, but it is most likely that that might be a contributing cause. The lenders themselves gave evidence that indicated a much more active process is taking place at the moment and that individuals who are having financial difficulties are speaking to their lenders at a much earlier date than they had done previously. We are all aware of the psychology of people putting their head in the sand and hoping that their debt problems will go away. Many of us have constituents who come to us with consumer credit problems and the first thing we say is, "Why on earth didn't you seek help earlier?" People have a tendency to wait until the whole thing has become completely insurmountable before asking for help. Probably because of all the publicity about repossessions and the schemes available, it appears that people are at least speaking to their lenders at a much earlier stage. Let us be blunt and point out that the lenders themselves have recognised that the state of the housing market means that it is not in their interests to repossess, because the only point in a mortgage company repossessing a property is so that it can sell the property and achieve a capital inflow. The current state of the market means that mortgage companies would not be able to sell, so it is in their interest to maintain the person in the home and to get some regular payments from them, even if the amount is less than what is actually due. A further issue is that a significant number of repossessions have been in respect of buy-to-let mortgages. That is obviously of concern to the person who owns the home, from whom it is repossessed, but there is a separate issue regarding the tenants of buy-to-let landlords, many of whom first realise that they are losing their home when the property is repossessed, despite having paid rent to the landlord. The Government have taken measures to try to sort that out and to make sure that tenants are given decent notice. Again, encouragement has been given to mortgage companies repossessing such homes to maintain the tenants and just collect the rent off them. It is not clear why there has been such low take-up, and that points to the fact that when the Government introduce such a scheme, some monitoring would be a good idea, so that everybody is aware of how it is working. If few people need to use it, the public money allocated to it could be redirected to some other group that could make use of it, including, presumably, housing associations which could build more houses.