by Mark Johnston
The housing market is so depressed at the moment it is a struggle to sell anything, therefore many home owners face repossession not because they refuse to downsize, but rather because they can not sell their homes.
However, the number of home repossessions has fallen to its lowest level in a year and a half despite the uncertain economy.
Therefore repossessions for 2012 appear to be on track to be slightly lower than last year and the lowest since 2007.
This drop has come despite the economy falling in to a double dip recession and the high level of unemployment.
The Ministry of Justice also released figures for the number of mortgage repossession actions started by lenders in the courts in England and Wales, which dropped by 8 per cent on the previous quarter, with 15,050 claims issued between April and June.
The number of borrowers with high levels of arrears has however been slowly creeping up, which is a position that many home owners will find difficult to recover from.
There were around 28,300 mortgages with arrears of more than 10% of their balance between April and June 2012, according to recent figures.
People can help to prevent a fall into mortgage arrears by prioritising their debts. Catherine Hearnden, director at MyMortgageDirect, recommended that home owners prioritise their essential and non-essential debts, explaining mortgage arrears is one aspect they should look to sort out first.
Research by the law firm Irwin Mitchell showed that of those who had previously defaulted on their mortgage between April and June 2011, 51.5% had now paid off all or some of their arrears.
This same research also showed that those who have fallen behind recently are also paying back larger chunks of their defaulted debt.
Paul Smee, the Council of Mortgage Lenders (CML) director general, said “the figures show that lenders, borrowers and debt advisers are working together to get through the current period of economic difficulty and keep mortgage possessions in check”.
Housing Minister Grant Shapps said: “Repossession is a frightening prospect for any homeowner. In these tough economic times, it’s good to know that the protections in place are preventing the worst for many families. But while repossessions remain lower than anticipated, there’s no room to be complacent.
Despite this, things could potentially take a turn for the worse if the economy deteriorated further as thousands of distressed borrowers are being kept on ‘life support’ by their lenders.
Richard Sexton, of e.surv chartered surveyors, said “we will soon reach a tipping point where the market will be hit by a glut of repossessions once banks decide they can no longer afford to sustain all of these struggling borrowers in long term arrears”.
Although repossessions look to be on a lower trajectory than previously predicted, the Council of Mortgage Lenders has not lowered its forecast as they state “current stability can always be disturbed”.
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