Britain will face a huge wave of repossessions as soon as interest rates start to rise again, according to the chief executive of the firm running £80bn of mortgages from bailed out banks.
In an interview with The Guardian, UK Asset Resolution chief executive Richard Banks says the projections for the number of people falling behind on payments could get “scary” if lenders did nothing to prepare for higher rates.
He says: “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.”
UKAR runs £80bn of mortgages bailed out by the taxpayer during the banking crisis. Banks says 23,000 of its 750,000 mortgage holders are more than six months behind with payments.
He believes a policy of “tough love” would be fairer to people facing long-term difficulty in keeping up payments on loans taken out when house prices were at their peak and personal incomes on the rise.
His warning came the day after the international bank regulator said the Bank of England, which has kept rates at 0.5 per cent for more than two years, would have to raise rates shortly to curb inflation.