Some 8,500 homes were repossessed in the second quarter of 2012, according to the Council of Mortgage Lenders, the lowest number since the final three months of 2010. The decline, from a total of 9,600 repossessions in the first quarter of the year, is welcome but the CML says it is sticking by its original forecast of 45,000 for the year – an increase on 2011 – because of the difficulties in the economy.
Mark Harris, chief executive of mortgage broker SPF Private Clients, says: ‘That repossessions are likely to rise for the year as a whole is depressingly predictable. Although interest rates are expected to remain at 0.5 per cent for the foreseeable future, a growing number of borrowers are still struggling. Mortgage rates continue to rise, despite the non-movement of base rate, with more than a million homeowners seeing an increase in mortgage rates in May, for example. Those with little or no equity in their homes don’t have the luxury of being able to remortgage onto a cheaper deal.
‘More than ever, the mortgage market is divided into the haves and the have-nots. Although several lenders have introduced chart-topping five-year fixes at record lows, only those borrowers with sizeable deposits or similar levels of equity in their home can benefit. Those up against it and in danger of having their homes repossessed don’t have this equity cushion so can’t access these market-leading deals. Subsequently, an increasing number of homeowners are getting into difficulty paying their mortgage because they can’t afford the payments on top of high living costs, low wage rises, and in some cases, losing their jobs.
‘It is essential that lenders continue to show forbearance and look after customers who are struggling by switching them to interest only, allowing them to take payment holidays or extend their mortgage terms, where practical. Likewise, borrowers must seek help, preferably before they miss a payment, speaking to their lender or one of the specialist – and free – debt agencies, such as Citizens Advice Bureau.’