Property Repossessions (Hansard, 15 April 1991)

§ The Parliamentary Under-Secretary of State, Department of the Environment (Baroness Blatch)
My Lords, figures released by the Council of Mortgage Lenders in February show that 43,890 dwellings were taken into possession during 1990, a figure representing 0.47 per cent. of all borrowers.

§ Lord Molloy
My Lords, I thank the noble Baroness for that Answer. Does she agree that the figure she has just given means that thousands of ordinary families are in despair? Is she aware that what irritates many people is that the cost to local 1255 authorities for rehousing those who have been more or less evicted after repossession of their homes is greater than if they were paid the interest on their mortgages? Perhaps saddest of all are those cases where people have been hit twice: first, where they have not been able to meet mortgage payments because the breadwinner is unemployed, and, secondly, for a minority, the grave danger that those people are being reduced to the ignoble and degrading status of being almost refugees in their own land.

§ Baroness Blatch
My Lords, I do not wish to say anything to detract from the distress of people unable to meet mortgage repayments, particularly when breadwinners lose their jobs. That is most distressing. However, I cannot sufficiently emphasise the importance of seeking advice early, through the many mechanisms in place, both local authorities and the lending agencies, to make sure that people are helped over this difficult period.

§ Lord Mackie of Benshie
My Lords, will the noble Baroness tell the House whether the figure of 0.4 per cent. of all borrowers is the percentage of money involved or the percentage of mortgaged houses being repossessed?

§ Baroness Blatch
My Lords, there are 9.2 million borrowers altogether, of which 0.47 per cent. are in difficulties. If one takes all people in difficulties—that is, those in arrears up to six or 12 months, or whose property has been repossessed—the total is still only 1.5 per cent. of the 9.2 million borrowers.

§ Lord Ezra
My Lords, the noble Baroness referred to the need for people who get into this unfortunate situation to seek the best possible advice. Is she aware that a campaign has recently been launched in the private sector to devote more funds to the provision of such advice? Presuming that the Government support that initiative, will they be prepared to put in additional resources?

§ Baroness Blatch
My Lords, we are aware of the work going on in the private sector. My honourable friend in another place, Sir George Young, is involved in discussions on the issue with the Council of Mortgage Lenders.

§ Lord Hatch of Lusby
My Lords, will the noble Baroness add to the figures that she gave for the past 12 months? What were the comparable figures on repossessions for the previous 12 months? Further, what were the figures for the year 1979–80?

§ Baroness Blatch
My Lords, in 1989 mortgages totalled 9.125 million. In June 1990 the total was 9.278 million and in December 1990—the latest figure we have—9.415 million. Properties taken into care in 1989 totalled 0.17 per cent. and in June 1990, 0.18 per cent. As I said, the latest figure is 0.47 per cent.

§ Lord Dean of Beswick
My Lords, is not immediate assistance necessary in order to reduce the distressing figures given by the Minister? He must be aware that Members on this side of the House welcome the Government's recent cut in the bank rate in order to 1256 reduce interest charges on mortgages. However, are the Government satisfied that their intention of reducing interest rates in the mortgage sector is being passed on to owner-occupiers by the building societies as quickly as it ought to be? It appears that some building societies are reluctant to reduce mortgages when the Government cut bank lending rates but when the bank rate rises mortgage rates are increased almost overnight.

§ Baroness Blatch
My Lords, I am not sure that the noble Lord's criticism stands up. A few days ago, when the bank rate was reduced by a half per cent., within hours of the announcement many leading building societies had reduced mortgages by 1 per cent.

§ Lord Dean of Beswick
My Lords, some of the largest building societies did not do so, and they gave no indication to people with mortgages when that reduction would be carried out. If some of the larger building societies appear to be dragging their feet will the Government deal with that under the appropriate legislation?

§ Baroness Blatch
My Lords, lending money to buy homes is a competitive business. It is up to people to change their mortgage from one company to another. That competition will have a downward pressure on interest rates.

§ Lord Molloy
My Lords, we note the concern of the noble Baroness for these unfortunate people. However, is she aware that in addition to all the economics involved the people whose houses are repossessed have to move out? That is one of the greatest humiliations of their lives. They were trying to achieve one of the most fundamental of desires—to own their own home—and to be thrown out of it is a massive humiliation which affects the entire family.

§ Baroness Blatch
My Lords, I cannot disagree with anything that the noble Lord said about how distressing it is. However, I keep returning to the importance of seeking early advice. People can negotiate with the lender in order to extend the period of the loan. Local authorities can check whether any help from the DSS is available and whether it is appropriate for people to receive such assistance. Local authorities can consider the possibility of purchasing a share in the equity of homes, which would be a cheaper option than rehousing such people. A great deal can be done and we hope that if people seek early advice it will be done.