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December 12, 2007    

CML urges lender forbearance and Government action

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by Gill Montia

The Council of Mortgage Lenders (CML) is urging banks and building societies to be patient with borrowers who will be coming to the end of their fixed-rate mortgages in the coming year.

The Council has joined David Cameron, the leader of the Conservative Party, in calling on the Government to acknowledge the fact that many of these homeowners will be facing serious affordability issues and that the Government could, for example, reduce the number of repossessions by increasing the amount of income support that is provided for mortgage interest.

For those remortgaging, higher interest rates will put a strain on household incomes, which are already under pressure from increased fuel and food costs.

In addition, borrowers with poor credit histories could be hit by punitive rates of interest, as the credit squeeze has seen the sub-prime lending sector continue to diminish.

The CML’s director general, Michael Coogan, believes the best way to support homeowners in financial difficulties is for lenders to exercise leniency and for new public policies to be created.

According to CML figures, 1.4 million short-term fixed-rate mortgages will come to an end in 2008, leading to increases in both arrears and repossessions.

Mr Coogan believes that an “appropriate benefits system targeted at those whose circumstances have changed” should be created.

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