Lenders
seizing properties from thousands of homeowners are contributing to escalating
stress levels across the
The Health
& Safety Executive defines stress as ‘an adverse reaction other people have
to excessive pressure or other types of demand placed upon them’. With the Council of Mortgage Lenders
predicting 45,000 or 123 repossessions a day this year, Burgess believes more
must be done to bail out consumers financially and reduce potential
stress-related illnesses.
He
comments: “Over 530,000 people* yearly seek medical advice for what they believe
to be work-related stress, so I wonder how many on top of this are suffering
from mortgage-related stress. Given
there are 11.8m people with mortgages in the UK, I’m worried this figure could
be huge.
“Everyone’s
talking about the financial toll of the credit crunch, but what about the
emotional implications? Studies show
that excessive or prolonged pressure can cause mental and physical problems, and
if adults are stressed and anxious, it’s likely to impact on children as
well.”
He
continues: “Repossessions are more than a financial sacrifice - people are
losing their homes and livelihoods, relationships are suffering and families are
being uprooted and taken away from their daily routines. This issue cannot be ignored – lenders’
irresponsible actions over the years have made them culpable. Particularly vulnerable are those who
borrowed beyond their means with 100% + mortgages and the 1.4m coming to the end
of fixed rate agreements.”
Government
measures to support consumers facing repossession include free legal advice,
specialist training for debt advice agencies and the offer of Income Support for
Mortgage Interest.
However,
Burgess considers this is too little too late: “Mortgage interest is only
payable to people who have been unemployed for nine months and will only pay on
mortgages up to £100,000. The average mortgage is around £160,000 so I fail to
see how this will help. There’s a
shortage of support across the board – lenders are happy to receive a ‘bail out’
from the Government when they’re suffering, but are unable to offer anything
substantive to customers when they need it most.
“A key
contributor to payment failure is redundancy, so to protect themselves consumers
either have to cover their payments privately through insurance or risk no
financial safety net at all.”
Burgess
concludes: “It’s all very well lenders urging consumers to speak to them if
they’re facing difficulty meeting mortgage repayments, but they’re unlikely to
be interested in any knock-on effects their inappropriate lending may
cause.”
Further information on
payment protection insurance can be found at www.britishinsurance.com