News

Second-charge mortgage lenders repossess 50% fewer properties

Released on 12 August 2010

Repossessions for second-charge mortgages were halved in the second quarter of 2010, compared with Q2 2009 according to latest figures from the Finance & Leasing Association. 

Second-charge mortgage providers repossessed 211 properties in the second quarter of 2010, which is a reflection of the longer-term approach lenders are taking to helping borrowers in financial difficulties. Repossession is the last resort after lenders have exhausted all other reasonable debt management and financial support options, including the Government’s schemes where appropriate. 

However, the FLA warned of the risks if, in the future, government cuts mean there is less support for borrowers facing financial difficulties.  

Fiona Hoyle, Head of Consumer Finance at the FLA, said:  

“The figures show that lenders are making every effort to avoid possessing homes, but the Government could damage these efforts if it cuts funding to the mortgage rescue scheme.  With uncertainty around unemployment levels, mortgage lenders are taking a long-term approach to recovering outstanding debt. The Government should adopt a similar approach to supporting home owners in difficulty.” 

Table 1:  The number of actual properties taken into possession by FLA second mortgage providers¹ 

 1.        Possession proceedings arising from FLA members’ second mortgage books, which have led to actual possession by the second mortgage provider. 

- ends - 

Note to editors: 

1. FLA members provide around 85% of all second-charge mortgages.
2. In November 2008, the FLA published Good Practice Guidelines for Second Charge Mortgages. The guidelines gave a commitment to help customers in difficulty by setting out the help that is available and committing lenders to consider each case on an individual basis, taking into account customers’ circumstances. The guidelines make clear that every effort will be made to come to an arrangement with customers in difficulty and that repossession is a last resort.
3. In 2009 FLA members provided £72.5 billion of new finance to UK businesses and households. £53 billion was in the form of consumer credit, including a third of all unsecured lending in the UK.  And £16.5 billion supported the purchase of half of new car registrations in the UK.
4. FLA members comply with the Pre Action Protocol introduced in 2008, as well as the additional requirements introduced by the OFT for second-charge lenders in possession cases in 2009. 

 For further media information, please contact:  

Helen Saxon, FLA

T: 020 7420 9664 E: helen.saxon@fla.org.uk M: 07918 766 993

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