by Mark Johnston
Calls for the Government to Provide More Help for Those Facing Repossession.
Research shows that shelter is one of the basic human needs and it seems that in British Society we have very strong ideas that the ideal form of shelter is owning your own home, or aspiring to do so.
Therefore for most people, this drive for property means taking on a mortgage. However, generally, a mortgage is entered into when times are good and sentiment in the economy is positive.
It seems that consumers get into difficulty meeting their mortgage payments for a variety of reasons, but more often it is because the loan was unaffordable in the first place. People also generally get into arrears because of unexpected life events such as redundancy or illness.
According to the Building Society Association (BSA), the most common reasons for being unable to meet mortgage payments was a loss in family income, followed closely by increased monthly payments and then other essential expenditure, ill health and finally paying other debts.
Recent data has shown that in the second quarter of 2012, repossessions dropped to the lowest level since the end of 2010, this seems to indicate that more homeowners are getting back on top of their finances.
However some experts have claimed that this decline in repossession is “in line with a seasonal pattern we have seen in each of the last three years”. In other words, repossessions have repeatedly got better around this time of year, only to get worse again.
The Council of Mortgage Lenders (CML) also believes that repossessions have so far been kept down to lower levels than predicted due to the support for mortgage (SMI) scheme.
However , they also add that due to the uncertain economic climate repossessioins could climb to 45,000 this year.
Richard Sexton, director of chartered surveyor e.surv, says that mortgage providers may not be able to help struggling borrowers for much longer. “Banks are acting as a life-support machine for a big block of borrowers in long-term arrears”.
Many experts feel that therefore the Government has an interest in keeping people in their homes as there is often a financial cost of rehousing families whose homes have been repossessed where they are considered vulnerable and at risk of homelessness.
Research through analysis of a 3 year survey of English housing data by Rhodes and Ford in 2010 has shown that almost half of those who had their homes repossessed by lenders went into social housing as did just over a third who were voluntarily repossessed.
A number of government schemes to help prevent repossessions have operated through the recession with differing levels of success.
Although, a report published by the Financial Inclusion Centre in July 2011 found that the problem of meeting mortgage payments should be shared by lenders too.
Preventing repossessions is likely to make business sense for lenders also as the process and the outcome of repossession is costly for them and also the reputational hit which lenders take for repossessing properties is difficult to quantify.
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