Risk Audit - Training and Recruitment
Monday, 23 January 2012

Mortgage Alarm

The Financial Times this morning focuses on the draft of CRD4 (the instrument implementing Basel 3 in Europe) and its impact on the mortgage market.

A new clause will see mortgages automatically in default from a capital perspective as soon as they are 90 days in arrears. This will see an increase in capital costs of 15 to 20 per cent making these books unviable.

In the UK at present under the terms of BIPRU mortgages are treated as being in default once they reach 180 days in arrears.

The British Bankers’ Association is set to lobby hard to dilute this change which could push mortgage costs up and increase repossessions.

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