Bankrupting the Common People

Repossession May Be Best, Government Minister Tells Homeowners

February 11, 2010

Telegraph - Home owners rounded on the Housing Minister after he claimed repossession was the best thing for some people on the day figures showed evictions at 14-year high. John Healey’s comments came as figures showed that an average of 126 repossessions a day last year.

Speaking on BBC’s Radio 5 Live, Mr Healey was asked why there were 46,000 repossessions last year despite the Government introducing schemes targeted at helping families to stay in their own home. He replied:

“In some cases there is no way round that and in some cases it is the best thing for the people who are struggling with these mortgages.”

Given the opportunity to clarify, he repeated: “Sometimes it is impossible for people to maintain the mortgage commitments they've got ... it may be the best thing in those circumstances.”

Mr Healey claimed £1,317 on MPs expenses to replace his own front door and overclaimed more than £2,000 for mortgage interest.

Charities and politicians immediately called for an apology, accusing Mr Healey of having lost touch with reality.

Grant Shapps, the Shadow Housing Minister, said:

"It is unbelievable that John Healey has now claimed that repossession can be the best option. Tell that to the 46,000 families who have been booted out of their homes in the past 12 months. This proves once again that Labour Ministers have completely lost touch with reality and I'm calling on the Housing Minister to apologise to the tens of thousands of families who have lost the roof over their heads.”

The CML is predicting an increase in repossessions and the number of people falling behind with their monthly mortgage payments this year, saying household finances will come under greater pressure amid economic uncertainty and possible interest rate rises.

Its latest annual figure is the highest level since 1995 and 15 per cent more than in 2008.

Campbell Robb, chief executive of Shelter said:

“Behind each one of these numbers is a heartbreaking story of a family losing their home and having to rebuild their lives.”

The Government claims schemes put in place to help borrowers in financial difficulty have helped 330,000 families stay in their homes. However, figures suggest only 92 families completed the Mortgage Rescue Scheme, where eligible families can either get an equity loan to reduce their mortgage, or sell their home and remain as tenants.

Howard Archer, an economist at Global Insight warned:

“A significant number of homeowners are still at risk. Unemployment is relatively high…many people have suffered wage freezes or even cuts, debt levels have risen and credit conditions remain very tight. Even if the economy can sustain recovery, activity is unlikely to be strong enough for some time to come to stop full-time employment falling further.”

It comes as lenders are criticized for continuing to offer the best deals to those with a significant deposit.

Figures by personal finance website Moneyfacts suggested borrowers with deposits of just 5 per cent pay £4,728 more on an average two year fixed rate deal compared to those with a 25 per cent deposit. This is based on borrowers looking for a mortgage of £150,000.

The CML also revealed a sharp decline in the number of mortgages for landlords.

It said 93,000 buy-to-loans were approved last year, down 58 per cent on the previous year’s 222,700 and the lowest annual figure since 2001.