Bank Chief Warns that Wave of Repossessions will Follow Interest Rate Increase

Wed, 29 Jun 2011

A leading UK banker has warned that the UK faces a tsunami of home repossessions once interest rates start to increase again.

Richard Banks, CEO of UK Asset Resolution (UKAR), has stated that the number of households lagging behind with mortgage repayments could get "scary" should mortgage lenders not do anything in preparation for these higher interest rates.

Banks stated that UKAR itself has witnessed a considerable pecentage of its mortgage holders lag behind with meeting payments, many of them having fall behind by six months and even more. He warns that should the situation not be handled well then it could get very messy.

The Council of Mortgage Lenders has increased its prediction for repossessions in 2011 from 40,000 to 45,000 in 2012.

Banks also stated that the Labour government's requests at the beginning of the crisis for mortgage lenders to keep families living in their homes had forced some homeowners into further debt .

He warned that the mortgage industry has been too lenient with certain customers. In addition, he considers that a "tough love" policy would be more fair on those facing long term problems in maintaining payments on loans taken out on peak house prices, when personal incomes were on the up.

Banks's comments follow the international bank regulator stating that the Bank of England, which maintained rates at 0.5% for more than two years, would need to increase rates soon to curb inflation ,

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