Government Failing To Prevent Rising Repossessions

9.26.36pm UTC (GMT +0000) Sat 2nd Feb 2008

Homeowners with large mortgages could be at risk with a slower economy

More than a million homeowners could be at risk of serious financial difficulty and possibly losing their homes in an economic slowdown, the Financial Services Authority has warned.

The FSA is preparing for a tougher climate of rising inflation and a slower economy. It fears that many homeowners with large mortgages who have borrowed three and a half times their salaries or more could be at risk.

Lib Dem Shadow Chancellor Vince Cable comments "Even before the credit crunch hit, 2007 was already on course to see more repossession orders than at any time since the early 1990s. With higher borrowing costs and huge levels of personal debt taking their toll, the new statistics are likely to show even worse repossession figures. It is critical that the Government works with the banks to prevent large scale repossessions, not only for the benefit of the banks and borrowers concerned, but also to help keep the wider economy stable."