IMLA criticises government for glossing over HMSS details again

Following the arrears and possessions figures from the CML, Peter Williams, executive director of IMLA, commented: "The government has today published the final scheme details for the Homeowner mortgage support scheme. While welcoming that the reality is that there are still a myriad of finer but crucial details which have yet to be settled. The scheme is complex as is evident from the published details and not without risks for borrowers and lenders so it is important these are got right and we have limited time to do this before an April launch. Because of the terms imposed by the government (eg, government covers 80% of deferred interest but not the capital, interest rate cap of 8%, 4 years claim guarantee period) lenders are concerned that the costs are still too heavily weighted in the government's favour. The general view is that the scheme is not actually going to help very many people. Certainly no borrower should be under any illusion that they will automatically be eligible for assistance under the scheme.

"Considerably more important is the way lenders are already helping borrowers in difficulty with their mortgages. And they're clearly doing a good job - that's why the CML's actual possession numbers are lower than the forecast for last year. Helping borrowers by managing through arrears and possessions has become a top priority and all lenders are engaged on this. The falls in interest rates have been helpful too in taking the pressure of households.

"However the most important action government could now take to help mortgage borrowers is to move to re-open the mortgage market as a whole. Government is supporting a small number of lenders and expecting them to do all of the UK's lending this year. They continue to ignore the full spectrum of lenders - including those who rely on the wholesale and capital markets for funding. It's these lenders who can offer tangible help in the form of competitively priced mortgage products, to non-prime, buy-to-let and self employed borrowers. Mending the securitisation markets is a real challenge but it is going to help far more borrowers than paying the interest costs on some mortgages for a couple of years. The restrictive approach adopted to date will not work and we need to see all banks, building societies and specialist lenders given access to government programmes to restart the funding so that the market can best help borrowers including those in difficulty."