Those saying that those who cannot pay their mortgage should sell, pocket the cash and rent or downsize are being very optimistic that this will be possible. We're not talking about a few people, we're talking about the likelihood of this happening en masse, with the resulting drop in house prices when multiple people are forced to sell at the same time.
So you will likely see a rise in those unable to repay the outstanding mortgage amount, possible having to declare bankruptcy and then being a burden on the state. Also, are there enough private rentals that take HB to house everyone this would affect?
Yes some may then capitalise on this and buy up property at a low price, but let's be realistic, is that likely to be long term renters who can suddenly afford a property (who are also likely to be hard hit by the economic downturn, and will likely need higher deposit at lower multiples of lending), or is it likely to be cash rich individuals who already have a rental property portfolio?
Anyway as others have said, between the banks themselves and the government there is likely to be some support available.
We are lucky in that we a) have income insurance and b) have enough savings to tide us over for a while in the case of both of us losing our jobs, but I am well aware the vast majority are not so lucky, particularly those that bought quite recently.
I also don't see the issue with those affected by the current situation being treated differently - we are in unprecedented times and the previous rules (where it would have been more possible for someone to find a job and sort themselves out) aren't necessarily fit for purpose now