Mortgage Repossessions Are Down

by Mark Johnston

A weakening economy and struggling housing market usual means one things, mortgage arrears and resulting repossessions. But a new report recently published shows that the number of people who have fallen behind with mortgage payments or worse still, had their home repossessed fell at the end of 2010.

Home owners have managed to stay afloat during the recession due to low base rates and help from the government. Past experience has told both lenders and the UK government that allowing borrowers to default on their loans helps no one in the long term so everyone has been doing all they can to avoid  it.

According to the Council of Mortgage Lenders (CML) around 251,000 borrowers were behind with mortgage payments or where in some kind of financial difficulty. This accounts for 1.5% of the total number of mortgages in the United Kingdom which is around 11.4 million loans. The number of borrowers who owed more than 2.5% of their balance dropped by 13% when compared to the same time back in 2009. That said, those borrowers who owed more than 10% of the balance of the mortgage rose marginally.

The support given to home owners is having a positive effect on the UK house market, luckily the low repossession rates are preventing the market from spiraling out of control.

Michael Coogan, director general at the Council of Mortgage Lenders (CML) said: “Lenders are continuing to work hard to help their borrowers who face temporary financial difficulties. Most people’s payment difficulties can be managed and controlled for a period until their circumstances improve.”

Another report published by the ministry of justice who deal with the legal side of repossession showed an improving picture. Around 15,000 request to repossesses homes went through UK courts which is well down ofn the 16,000 cases recorded during 2009.

One of the factors that has helped to keep figures down is the mortgage Pre-Action Protocol which came into effect at the end of 2008. The rules make sure that banks and building societies act in a reasonable manor when dealing with mortgage arrears and encourage more dialog between parties to try and find other solutions to the problem. This not only attempts to reduce the number of repossessions but it also makes better use of court time. Alongside these new rules, some homeowners hand the property over voluntarily which don’t report as repossessions. In other cases that reach court, some judges may find the repossession request unfair and as a result may not grant the order.

It is worth noting that recently there has been an increase in the number of claims that have be passed by Judge to be repossessed. In the second half of 2010, 67 percent orders were grants when compared to 57 percent the year before. Whilst the number of repossession orders were wildly different in each part of the Country, the worst hit were Scarborough and Corby whilst the places with the least number of repossessions were in the south especially in the Camden borough of London.

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