The Council of Mortgage Lenders (CML) has issued an open letter to chancellor Alistair Darling requesting a greater degree of support for consumers against home repossessions in light of worsening economic circumstances.

In the letter, the group notes that the ten year period of low inflation and low interest rates - which is said to be essential to the vigour of the housing market - has been followed by a series of shocks in the past year. The credit crunch, a drop in the number of loans for house purchases, the nationalisation of Northern Rock, a shortfall of new mortgage products and higher mortgage prices are all noted as events and circumstances that will in the future necessitate a greater degree of protection for consumers throughout the UK.

The CML urges Mr Darling to renew with greater vitality cooperation that was originally engendered by the creation of the Sustainable Home Ownership Initiative in 1999. In response to a May statement by the chancellor in which four basic rules were set out to ensure that consumers who were unable to meet the cost of mortgage repayments were treated fairly, the CML highlighted the fact that individual lenders will approach mortgage possessions based on a range of criteria such as whether insurance or other benefits might be claimed to help enhance the borrowers’ income, whether mortgage borrowers have other debts that are not being paid and whether a possession action is under way by a second charge or other secured loan provider. As such, it notes that while it is committed to regulations set out by the mortgage conduct of business rules, ensuring customers are well protected cannot be managed in a standardised way.

“In some cases, allowing the borrowers to sell voluntarily may be the best option, but that runs the risk of the former homeowners being considered ‘intentionally homeless’ by their local authority. Unfortunately, as the advice sector and regulators recognise, there are cases where possession may be the most appropriate course of action. This would be where arrears management is not going to resolve the borrowers’ situation, for example due to a loss of income which is unlikely to be replaced in the short term,” said Michael Coogan, director general of the CML and author of the open letter.

For those who are concerned about their ability to meet mortgage and household bill repayments, taking out a consolidation loan may help to alleviate the strain of payment demands. By spreading payments out over a longer period of time, people may find that they are able to regain control of their finances and avoid exposure to further debt arising from ongoing missed payments.

The CML asserts that it has taken significant steps to investigate arrears trends in the marketplace in an effort to protect consumers against the risk of repossession, which the group says has been of particular value in preparing for a likely downturn in the UK economy as a whole.

Concluding, the group insist that they will continue to work closely with ministers to ensure that a robust safety net is in place to protect UK homeowners.

When Alistair Darling made his inaugural budget announcement in March, credit reference agency CallCredit suggested that it would provide an opportunity for consumers to rein in on spending and meet demands on household expenditure such as food, energy and fuel costs and personal loan and credit repayments.

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