Tuesday, December 2, 2008
RBS’s six month stay-of-execution will cause a backlog of repossessions later
"One of the reasons RBS can afford to give six months breathing space to delinquent borrowers is that it was never a particularly big mortgage lender in the first place, with only 7 per cent of the market, and has in any case largely managed to avoid buy-to-let and other distress areas of the mortgage market. As unemployment rises, ever more mortgage holders will find themselves in arrears. Yet the problem is hardly going to be solved by a six-month stay of execution. Indeed, it might make it even worse, as a backlog of eventual repossessions builds up in the system. A period of necessary adjustment is under way, in the housing market and elsewhere. Politicians still like to think they can buck the market by ordering the system around. They are likely to be cruelly disappointed."