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Mortgage Repayments

Volume 178: debated on Friday 12 October 1990

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To ask the Chancellor of the Exchequer what is the present number of people six to 12 months in arrears on their mortgage repayments.

Figures published by the Council of Mortgage Lenders show that at end June 1990 there were 76,280 mortgage loans six to 12 months in arrears.

Is the Minister aware that in the past six months more than 400,000 people were two to three months in arrears and well over 14,000 had their homes repossessed? Does he think that his 1 per cent. cut in interest rates will make much of a dent in those figures?

I am sure that any cut in interest rates will help people who, for that reason, are in trouble with their mortgages. While all of us feel a great deal of sympathy for people in difficulty with their mortgage payments, the problem should be kept in perspective. The level of repossessions in the year to 30 June was less than one third of 1 per cent. of all mortgages, and we should keep the problem in perspective.

Does my hon. Friend agree that one of the great tributes to the Government's economic performance has been that mortgages have been readily available to people at prices that they can afford, which has encouraged the responsibility of home ownership? Will he do what he can to use his good offices to encourage the building societies to help fund the excellent debt advice services currently run by the Advice Services Alliance?

I shall take up my hon. Friend's second point first. As he probably knows, the Government already give a grant of £11 million to citizens advice bureaux. On his first point, it is worth recalling, when considering the figures, that during the past 11 years there have been 3·5 million additional home owners—more than ever before, and 3 million of whom have mortgages—and 900,000 additional mortgages have been taken out in the past two and a half years.

Is the Minister aware of the number of people who, because they could not find rented accommodation, decided to buy a house, and were actively encouraged to do so by the Government and building societies, but who now find themselves—certainly in the west midlands and my district—in tremendous difficulties? A number of my constituents face the repossession of their homes, with the local authorities not always being able to help. Is the Minister further aware that those and millions of other people who are just able to cope with paying their mortgages do not have the benefit of the tax havens mentioned inThe Sunday Times last Sunday? When will that loophole be closed? Why is it that time and again the rich are rewarded with the advantages of loopholes that other people cannot use?

If the hon. Gentleman is so worried about the unavailability of rented accommodation, perhaps he should not have had such a doctrinaire opposition to the various rent Acts and supported us when we tried to free that sector of the housing market. As for people having difficulties with their mortgages, as I said, that is certainly true and all hon. Members have a great deal of sympathy with such people. However, most arrears are sorted out and few short-term arrears turn into long-term arrears. The figures for repossession show that the total number of repossessions in the past 12 months has been 21,780, and in 1987 it was more, at 22,930. During the intervening period there have been nearly 1 million more mortgages. Perhaps the figures do not bear out what the hon. Gentleman said.

Will my hon. Friend consider what the position would have been if interest rates had not gone up last year, when house prices were going up at a rate of 20 or 30 per cent., particularly in the south-east and south-west, and the first-time buyer was being completely taken out of the market? Has he noticed that during the past year, house prices, particularly for the first-time buyer, have gone down by 10 per cent. in those districts?

My hon. Friend makes an extremely good point. There was no way that house prices could continue to rise at the 20 per cent. a year at which they were rising, which was damaging for potential home owners. Some adjustment was long overdue.