16 LOOKING AHEAD.
Working together to provide the best support,
with Nick Wood, Senior Policy Advisor at CML.
When the latest figures from the Council of
accounts in arrears are behind by more than 10 per cent of
Mortgage Lenders (CML) were unveiled in
the outstanding balance, compared to around one in eight
November, they were hailed as a step in the right
at the beginning of 2009. Lenders have worked hard to
direction for struggling homeowners - and a sign
support those customers in financial difficulty, by offering
that targeted debt advice is working. But beyond the headlines,
forbearance and referring to independent debt advice, and
what does the CML report really mean for borrowers?
of course low interest rates have helped suppress payment
The figures show a fall in the overall number of first charge
arrears and repossessions. A total of 149,400 mortgages,
representing 1.33 per cent of the entire stock of mortgages,
problems for a lot of people.
“Although it has set greater expectations on what will trigger
consideration of a rise in base rate, the Monetary Policy
had arrears equivalent to more than 2.5 per cent of their
Committee (MPC) has recently foreshortened its estimates
mortgage balance at the end of the third quarter. This was
of when this might happen. In November, the MPC gave
down from 154,900 in the second quarter, and 159,100 in the
this a two-in-three chance of occurring by the end of 2016,
third quarter of 2012.
compared to its even money prediction back in August.
Repossessions came in at their lowest level since the
“Naturally there will be question marks over how even a
CML began collecting quarterly figures. There were 7,200
marginal increase in interest rates will impact customers
possessions in the third quarter down from 7,600 in the
conditioned to a historically low and prolonged interest rate
second quarter and 8,200 in the third quarter of last year.
environment. But more immediate pressures, such as cost
Here Nick Wood, Senior Policy Advisor at CML, looks
of living squeezes and the finite nature of forbearance,
behind the headlines to explore what the figures mean
may come to bear on those customers in deepest arrears.
to his members and their debt advice partners.
“And it is that need to be forward looking that led the FCA
He looks forward to examine new challenges facing stretched
to undertake a pre-emptive thematic review into lenders’
borrowers in 2014 and beyond – and suggests how lenders
arrears and forbearance management approaches earlier
and debt advisors can work in partnership to support them.
this year. The findings will not be known until early this
Nick says: “To understand the wider importance of the
year, but I hope the outcome will assist lenders as their
figures it’s crucial to put them in to some kind of context.
approaches evolve.
“Although the overall arrears and repossessions numbers are
“One of the ways our members can help to manage down
down, the proportion of accounts in the deepest arrears has
future risks is by engaging with customers as early as possible
risen steadily over the last four years. Around one in five
and promoting the virtues of debt advice. Partnership and
16
UKAR ARENA WINTER 2013