Debtors Need Insurance to Prevent Repossessions - Cable

11.44.49am BST (GMT +0100) Wed 27th Sep 2006

Liberal Democrat Shadow Chancellor, Vincent Cable MP

Commenting on a report by Datamonitor, showing that debt levels in Britain are significantly higher than in the rest of Europe, Liberal Democrat Shadow Chancellor, Vince Cable MP said: "With both unemployment and interest rates likely to rise in the near future, the problems associated with personal debt and overstretched budgets could get significantly worse.

"By far the largest part of household debt is mortgage debt. Yet it is truly alarming that there is no effective safety net for the large majority of mortgage borrowers.

"They have no recourse to social security for nine months and barely a quarter have insurance to cover defaults. It would only require a modest deterioration in the economy for large numbers of young families to find themselves in serious financial difficulty.

"It is essential that urgent attention is paid to ensuring that more borrowers are insured and lending in the future is a done on a much more responsible basis.

"The banks have a heavy responsibility where they have lent beyond prudent limits, and they should now be thinking of 'cooling' resources to create an emergency fund to forestall large-scale financial hardship."