JRF calls for safety net for at-risk homeowners

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JRF calls for safety net for at-risk homeowners

Wed 5th Mar 2008

A report published today by the Joseph Rowntree Foundation recommends creating a safety net for homeowners who may be at risk of repossession.

It calls for the implementation of the Sustainable Home Ownership Partnership (Shop) scheme, which offers a cheap form of insurance through a partnership between the government, lenders and borrowers.

As analysts suggest that a recession may be looming, the foundation warns that if the economy were to experience conditions similar to those faced in 1992, at the peak of the housing market collapse, almost 25 per cent more homeowners would be at risk of repossession.

It argues that current safety nets are inadequate and suggests that the cost of implementing Shop could be shared between the three main players.

The foundation believes that making the scheme a joint venture between government and lenders will minimise the impact on public spending, ensure accountability and transparency and give mortgage providers an incentive to lend responsibly.

Report co-author Steve Wilcox said: "The policy introduced in 1995 isn't working. Vulnerable home-owners are now more exposed to risk than they were in 1992."

As the impact of the credit crunch has hit UK mortgage providers, many of them have tightened their lending practices and raised rates, making it difficult for people on low-incomes to get on the property ladder or meet mortgage repayments.

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