Did anyone notice the latest repossession figures last week? Apparently they have increased. Fortunately the media did not immediately leap on this as irrefutable proof of a mortgage ‘meltdown’ and treated it in the responsible manner we have all become accustomed to. Oh, that’s right, they did actually seize upon it like a pack of rabid dogs, blowing it out of proportion and giving it more prominence than any other story.
This is not great news, but it was expected. Arrears and possessions are rising as a direct result of the higher cost of living, not only higher mortgage rates. Many borrowers have taken the largest mortgage they could, at the same time piling a heap of unsecured debt on top. Throw in more expensive mortgage funding, record fuel costs and inflation of 3.8%, and it is little wonder people are falling into arrears. The current situation is not as bad as it was during the last housing market downturn, when 75,500 homes were repossessed in 1991. The CML believes 45,000 homes will be repossessed this year, which is less than 1% of all mortgages in the UK.
Lenders treat repossession as a last resort, and their arrears management is much better than it was last time. They generally lose money when they repossess, especially in a flat or falling market, so why would they seek to repossess when they do not have to?
The key to this situation is to kick start the market. Rather than looking to blame brokers and lenders, the Government should be looking more seriously at what measures it can implement and when.
I agree with IMLA: rather than look at a hiatus for Stamp Duty, the Government should consider reinvigorating its income support scheme for mortgages in order to help people in difficulty to stay in their homes – 45,000 people would be very grateful. n
