Repossessions at highest level for eight years
According to a recent report repossession levels in the UK have hit their highest level in eight years, fuelled by tight credit conditions, strained household finances, and high interest rates. Although the interest rate has been cut twice in the last three months, many say it was too little too late, with many homeowners already having been pushed over the financial edge by rising mortgage repayments as well as rising living costs including food, petrol, and energy prices.
Over the course of 2007 repossession levels rocketed by over 20%, putting the number of repossessions at an eight year high. Over 27,000 homeowners had their homes repossessed during the year, although reports state that the figure was still lower than many mortgage lenders had expected them to be. However, some officials state that this may be due to the take up of sale and rent buy schemes, which may have affected the true level of repossessions that would otherwise have taken place.
An official from the Council of Mortgage Lenders stated: 'Lenders take their responsibilities to borrowers facing repayment difficulties very seriously, and many go to exceptional lengths to provide debt counselling, reschedule payments, extend loan terms, or in some circumstances even allow payment breaks. They will abandon repossession action right up to the last moment if they can reach a payment solution consistent with both the borrower's and the lender's interests.
He added: 'Despite this, the number of repossessions is likely to be higher in 2008 as a result of wider issues in the economy and the mortgage-funding markets. No-one is necessarily to blame for this - even the best risk assessment cannot provide a crystal ball insight to the future for each particular borrower. But that is all the more reason to ensure that there is a fair and reasonable balance of responsibility between consumers themselves, their advisers and lenders, and the system of State support to ensure that home-ownership remains sustainable and that repossessions are minimised. Anyone who thinks they might be heading into difficulty should contact their lender, as problems are easier to resolve if they are tackled at an early stage. Lenders want to avoid repossessions just as much as borrowers do.'
Tom Smith
15th February 2008
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