According to the Council of Mortgage Lenders, property repossessions are NOT fading into history.
The figures just released tell of a 9% rise in the second half of 2006
. In real terms that means 8,860 individuals and families lost their homes
and that the total number of repossessions that took place during 2006 was approximately 17,000 - a three-fold increase over the past two years.
What's in Store?
The Council of Mortgage Lenders is pessimistic about the future too, expecting to see that figure rise to around 19,000 this year and 20,000 in 2008
. The Royal Institute of Chartered Surveyors agrees with this prediction, warning that repossessions are likely to rise as higher interest rates hit and as some borrowers reach the end of fixed rate deals. As house prices continue to increase and mortgage rates look set to rise, people with mortgages are likely to be even more stretched financially whilst those wanting to get on the housing ladder are finding it increasingly difficult to do so.
Borrowers get into trouble primarily when interest rates go up. High mortgages, which seemed attractive when rates were low, suddenly become impossible to pay and debt mounts up. The effect of the higher interest rates is not seen immediately, but takes a while to filter through into the market as borrowers continue to struggle to meet their repayment commitments. The Bank of England raised interest rates twice in 2006 and again during January this year.
Much is made in the media of the increasing spiral of personal debt, and yet the amount of mortgage arrears dropped during 2006. Those borrowers who were in the three to six month arrears bracket dropped from 62,920 in 2005 to 59,100 in 2006. Longer term defaulters - those owing six to twelve months of their mortgage payments - also saw a slight reduction from 34,630 in 2005 to 31,120 last year. Short term arrears are frequently 'managed' by the lender in conjunction with the home owner, but the longer term debtor faces the very real possibility of losing their home. As mortgage interest rates increase, the Council of Mortgage Lenders says that it expects this fall in arrears to be halted, with 2007 seeing even more people in serious debt.
Not All Gloomy News
Despite what seems like gloomy news, it should be remembered that there are close on 12 million mortgages in the UK and the above figures represent only a small proportion of these. In the property crash of the 1990s, repossessions were running at something like fifteen times the rate experienced in 2006. Even if you are under threat of repossession it doesn't mean that you have to lose your home. Property Rescue gives a real alternative to people who thought they had explored all the options. The 'sell and rent back' facility allows you to sell your home, clear your debts, but stay exactly where you are by renting the property from Property Rescue.
You can even choose to have the option of buying back your home at a later date when you might be more financially stable. Staying in your home has obvious benefits, but many people who approach Property Rescue because they have mortgage arrears don't even know that this is a possibility and are delighted to find out that their arrears can be paid off and the threat of repossession can be dismissed. Repossession was always thought of as a last resort, but Property Rescue give you the possibility of a new start. Further details on 'buy and rent back' and 'buy back' options are all on the Property Rescue website.