The housing charity announced the number of people constantly struggling to pay rent or a mortgage has almost doubled over the past year, bringing the percentage of rent or mortgage payers falling behind with their payments to 4%, or 1.4m people. Of those who do meet their deadlines, a significant minority have resorted to desperate measures such as unauthorised overdrafts or payday loans.
Shelter chief executive Campbell Robb said: “It’s shocking to think that so many families will be starting the New Year with a huge weight hanging over them, trapped in a daily struggle to keep their home.
“Payday loans may seem like a quick fix, but the huge interest charges mean things can quickly spiral out of control.”
Few would disagree that householders are struggling. But as Shelter has proved unwilling to release specific figures for the number of struggling mortgage holders as opposed to renters, today’s research may contribute little to understanding their plight.
A Council of Mortgage Lenders spokeswoman said the limited nature of the Shelter research released so far meant it was difficult to draw conclusions: “If you look at our own arrears and possessions data you will see a different picture. The vast majority of householders appear to be meeting their commitments on time.”
Indeed, the fate of mortgage holders and renters near the line may be diverging. According to government possession figures, in the years since 2008, mortgage possession claims have fallen. The report noted: “This fall in the number of claims coincides with lower interest rates and a more proactive approach from lenders in managing consumers in financial difficulties, and various interventions, such as introduction of the Mortgage Pre-Action Protocol.”
By contrast, there has been a moderate upward trend in landlord possession claims issued since 2010. In the third quarter of 2012, there were 38,947 such claims – more than twice those issued for mortgages.
Coreco director Andrew Montlake said it was “not good for anyone” if homeowners struggled to pay their mortgage and lenders and brokers must work together to solve the situation.
“There is always going to be a ‘have’ and ‘have not’ split,” he said. “The task of everyone and the government is to reduce the number of ‘have nots’ but it is a difficult situation. There is a whole swathe of mortgage prisoners who cannot remortgage and are stuck on variable rates and it is those people we have to look out for.
“If rates do rise in the future then there are problems stored up. Lenders can help themselves by potentially offering decent fixed rates like Woolwich and Halifax are doing with their product transfer rates.”
It seems that while the spectre of widespread repossession may not be as close as this research suggests, many mortgage holders could also merely be spectators to any housing market growth the New Year brings.