During 2013, 33,000 properties will be repossessed, according to a recent analysis of more than one million mortgage accounts by HML. This would be a 2.7% decline on the 33,900 repossessed properties reported by the Council of Mortgage Lenders (CML) for 2012.
While it is fantastic news that repossessions are expected to fall over the year, this doesn’t mean that lenders, mortgage brokers and other parties can take their eye off the ball. According to our forecast, Northern Ireland will have more properties repossessed – 4,073 – than any other region.
In contrast, the North will experience the lowest number of repossessions throughout 2013 (1,442). The South West, meanwhile, will have the lowest repossession rate out of all of the regions, with this predicted to stand at 0.18%.
What this means for mortgage brokers?
A reduction in repossessions is welcomed, but our prediction of 33,000 properties is still a significant number and one that mortgage brokers should take note of.
Since 2008, the mortgage market has contracted and become homogenised, resulting in a reduction in product choice. This means it is more important than ever for brokers to match up the needs of their customers with the needs of their lenders.
The current benign interest rate environment and stricter lending criteria contributed to a decline in repossessions during 2012, but there are many factors mortgage brokers need to keep an eye on throughout the coming months.
A fall in average earnings growth and living standards, and inflation standing at 2.7% mean mortgage borrowers continue to be squeezed – and many will reach their limit regarding their ability to make monthly repayments.
It is essential that mortgage brokers equip themselves with the knowledge required to ensure they are recommending the right products. Brokers can also draw upon several sources of impairment data to ensure they are getting the full – regional – picture.
Regional repossession data can be used in many ways, but perhaps one of the most important is using it to shape customer contact strategies, with an eye on the ‘stickability’ of ancillary product sales.
As our repossession forecast shows, mortgage brokers operating in Northern Ireland, for example, may wish to contact their customers more frequently than those who live in other areas of the UK.
Spotting a mortgage repayment problem in its early stages is a lot easier to deal with than only being informed of difficulties much further down the line. A mortgage broker who regularly checks in with their customers can get an idea of where borrowers stand and whether action is required.
Using a combination of regional-level statistics and wider macroeconomic data – including the central bank’s interest rate and GDP – can help equip a mortgage broker with the right tools to meet the requirements of both their customers and lenders.
Both lenders and brokers clearly have a keen interest in ensuring that borrowers can afford their products, and drawing on a variety of data can help them in their decision-making.
