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GOOD NEWS FOR HOME OWNERS WITH REPOSSESSIONS AT EIGHT-YEAR LOW

Published on:February 13, 2015Author:The Debt Advisor

The latest statistics released from The Council of Mortgage Lenders show that the number of repossessions fell 26% from 28,900 in 2013 to 21,000 in 2014. At 0.19%, the repossession rate was also lower in 2014 than at any time since 2006.

Council of Mortgage Lenders’ members are banks, building societies and other lenders who together undertake around 95% of all residential mortgage lending in the UK. There are 11.1 million mortgages in the UK, with loans worth over £1.3 trillion.

The number of mortgages in arrears at the end of 2014 was also lower than at any time since 2006. 1.05% of all mortgages were in arrears equivalent to 2.5% or more of the mortgage balance – down from 1.29% at the end of 2013 (and 1.12% at the end of the third quarter of 2014). In numerical terms, this equates to 116,800 loans – down from 124,400 at the end of the third quarter, and 144,600 at the end of 2013.

Two of the most common factors leading to mortgage difficulty are income shocks (such as unemployment) or rising interest rates both of which have had little impact in recent times, aiding the decline in arrears and repossessions which have been supported by effective lender practise and compliance.

CML director general Paul Smee commented:

“The relatively low rate of repossession among owner-occupiers – around 1 in 600 mortgages last year – should help to reassure borrowers that, if they do face payment difficulties, lenders will work with them to try to resolve their problems. Repossession is only ever a last resort.

Within the total number of mortgages in arrears, there was also a decline in all of the individual arrears bands. Even among the heaviest arrears band (more than 10%), there was a 14% decline year-on-year to 24,700 cases at the end of 2014 – 5% lower than at the end of the third quarter.

Looking to the future, both lenders and the CML are aware that interest rates will rise and have an adverse affect on some households.  They are urging customers to plan ahead for the occurrence in order to prevent shock and potential struggles.

Paul Smee added: “No-one should be lulled into a false sense of security that the current low interest rates we are experiencing will last forever, though. Rules are in place to ensure lenders assess future affordability, but these are not a substitute for careful borrowing. It’s essential for borrowers themselves to have one eye on the future. Think through any borrowing taken on now to ensure it will still be affordable if and when rates rise.”

However for the moment positives can be taken from the decline in repossessions as the UK enjoys a relative period of stability.

If you are struggling with debt issues, whether these are business or personal debts, The Debt Advisor Ltd which incorporates The Business Debt Advisor can help.  There are a range of solutions available which include both formal and informal solutions such as Debt Management Plans (DMP)Individual Voluntary Arrangements (IVA),  Bankruptcy as well as solutions for Businesses.

There is also free debt help and advice available through a variety of debt charities. For more information, we recommend you visit www.moneyadviceservice.org.uk.

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