In his pre-Budget report, Chancellor Alistair Darling pledged that banks would allow three months before taking repossession proceedings but RBS has extended this after a Government bailout of its rights issue last week saw 58 per cent of the bank taken into state ownership. The six-month minimum will last until at least the end of 2009.
RBS managing director of retail banking Craig Donaldson says: “We hope our commitment will reassure customers that we are committed to providing them with enough time, professional support and the assistance they need to resolve their financial difficulties.”
Savills director Melanie Bien says it is a matter of time before other big banks, especially those with Government stakes, introduce similar strategies but warns there may be downsides.
She says: “There is a danger with this in as much as people could see it as a six-month holiday from their mortgage and put off their arrears problems. With the message from the Government being spend, spend, spend, is this the best thing to do right now?”
Connells Survey & Valuation managing director Ross Bowen says RBS’s decision may both help and hinder the ailing housing market. He says: “The most important thing is to stimulate and crystallise the demand for housing. Will this move make people more secure? Yes. Will it stimulate activity? It is difficult to say. There is no evidence that repossessed properties stimulate the market but it is vital that we help people get moving again as the health of the economy depends on it.”