Repossession levels have rocketed in the UK
October 4, 2008 · Print This Article
Since interest rates started going up in the UK between August 2006 and July 2007 there have been grave concerns in relation to the millions of people who were on cheap fixed rate mortgages and were due to come off them, as they would be left to try and manage rocketing repayments with interest rates so much higher than when they took out their fixed rate mortgage. Thankfully, some enjoyed a little saving grace through the fact that between December 2007 and April of this year interest rates fell three times, although they were still higher than when many of these homeowners took out their cheap fixed rate deals.
However, just as interest rates started to fall, living costs and bills started to rise, which meant that many households were still facing real financial problems. In addition to crippling household costs, many homeowners have been faced with trying to get a more affordable mortgage when their cheap deal comes to an end, but with the mortgage drought still ongoing there is very little around, and many have been forced to switch to their lender’s expensive standard variable rate because they are either unable to get a cheaper mortgage or they cannot afford the crippling arrangement fees that come with switching mortgages.
These and other factors have seen the level of repossession for the first half of this year rocket, and according to recent reports repossession levels have soared by 41% in the first half of this year. Industry officials have said that repossessions have now hit the highest level since the middle of the 1990s, with nearly nineteen thousand properties seized by lenders after homeowners failed to keep up with mortgage repayments according to the Council of Mortgage Lenders.
Michael Coogan from the Council of Mortgage Lenders stated: ‘The number of people facing difficulty needs to be kept in perspective. The good news is that most people are coping well and continuing to pay their mortgages in full, despite the higher costs of food and fuel and the higher mortgage rates now prevailing in the market for those coming off cheaper original deals. But it is inevitable that more borrowers’ coping strategies will come under pressure in current conditions than in the unusually benign years of the last decade. That’s why lenders, government and the advice sector are working closely together to minimise the impact on borrowers. ‘
He added: ‘No-one wants to see a household lose their home, and repossession typically leads to a loss for the lender as well. The focus of lenders’ arrears management policies today is on seeking realistic alternatives that balance the interests of customer and lender. Anyone who thinks they may be heading towards financial problems should contact their lender to discuss their options – the earlier the better.’