Rate rise may spark 'mortgage crisis'
The boss of the firm that runs the £80bn of nationalised mortgages at Northern Rock and Bradford & Bingley has warned that households will need to employ a 'tough love' approach to prepare for intrest rate rises to avoid a flood of home repossessions.
Richard Banks, chief executive of UK Asset Resolution, said in a interview in the Guardian: 'You can see if you don't do something about it, you can see a tsunami. If you don't get into the hills you could get drowned by this. If you don't manage this properly it could get very messy.'
Mr Banks claims that lenient lenders who let families that can't pay their mortgages of the hook by shifting them to an easier price plan is only creating more debt. He said that he believes a policy of 'tough love' would be a better option.
'It's a tough love approach,' he said. 'It's treating customers fairly, not nicely, because if you can't afford your mortgage you are only increasing your indebtedness.'