Firstrung - Government schemes helping to reduce arrears

Mortgage arrears are reducing as a result of various government schemes, it has been claimed.

Paul Holmes, chief executive of housing finance specialist Firstrung, said lenders have taken up schemes which consolidate arrears into a new agreement, which in turn has lowered the number of households facing difficulties.

The comments follow the publication of a report by the Financial Services Authority, which revealed that the number of new arrears cases fell by nine per cent to 41,000 in the final quarter of 2009.

Mr Holmes said the schemes have proven to be a "superb" short-term solution but questioned how long the measures should stay in place.

"Having taken up these various initiatives from the government which have underpinned people's arrears, there is only so much leverage they can use to continue to do that," he said.

"I don't think on an ongoing basis that is a practical solution because the various lending dams will breach once again if they simply allow people to roll over those payments continually."

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