Calls for repossession safety net

A new safety net needs to be created to help protect the growing number of people who risk having their home repossessed, a charity has said.

The Joseph Rowntree Foundation has said a new insurance scheme is required to help people who are unable to keep up with their mortgage repayments.

The group has proposed a Sustainable Home Ownership Partnership (SHOP) cover, which would cover mortgage repayments for 10 months if homeowners were unable to work because of sickness, an accident or unemployment.

The scheme would be run as a partnership between the Government, lenders and borrowers and would make available a much cheaper form of insurance than the covers already available.

The charity has said that homeowners are poorly protected against loss of income and less than one in five have private insurance, much less than the 50 per cent the Government had hoped for.

More than 45,000 homes could be repossessed this year, according to the Council of Mortgage Lenders.

In the last housing market recession in the early 1990s, around 300,000 people lost their homes in five years.

The charity has warned that if the same recession were to happen again, the number of people in serious arrears would be 25 per cent higher.

The Joseph Rowntree Foundation has said that SHOP would cost around £3.40 per month for every £100 of mortgage repayments.

It would be compulsory for all new borrowers and people remortgaging to join the scheme, meaning that while coverage would initially be limited, it would grow very quickly as new mortgages represent around ten per cent of all home loans.

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