RBS gives six-month break to struggling homeowners

Published on Monday 1 December 2008 09:06

HOMEOWNERS struggling with mortgage payments are to be given six months breathing space by Royal Bank of Scotland, it was revealed today.

The Edinburgh-based bank is to allow double the three months recommended by the Government before starting to push for repossession orders.

It comes just days after 58 per cent of the bank fell under state control and is being seen as part of a more consumer-friendly approach.

The move follows Chancellor Alistair Darling's insistence that banks who have taken Government funds have to realise that the taxpayer must "get something in return".

The credit crunch has led to a sharp rise in borrowers falling behind on payments with an average of three homeowners a day in Edinburgh facing legal action from lenders for late payments.

Stephen Hester, who formally replaced Sir Fred Goodwin as chief executive at RBS just 11 days ago, said: "The Government has called on banks to wait at least three months before moving to repossess the house of a customer who cannot make mortgage payments. Today, RBS Group is announcing that we can be even more helpful.

"From December 1, our RBS and NatWest mortgage customers in need will be given a six month moratorium to right themselves before we begin repossession proceedings. "

He said the bank was "conscious that many people face anxiety" about repayments in the tough economic climate.

He added: "In our UK residential mortgage lending, and as a banker to small businesses, we are determined to serve customers well in the difficult times ahead and have commitments to Government that we intend to meet in letter and spirit."

It is expected other banks may follow suit as the Government calls for greater help from banks for borrowers and businesses.

MPs are also reportedly working on plans for statutory codes of practice in the banking industry, which could replace the current voluntary system.

Referring to the Government's investment in banks yesterday, Mr Darling said: "They have to realise that the taxpayer's going to get something in return."

Recent figures obtained by the Evening News revealed that 582 repossession orders were launched by lenders in Edinburgh courts in the first six months of the financial year.