Recession turns to repossession for thousands of homeowners
Feb 20th, 2009 by Jamie Bradley
House prices may be on the decline, but the number of house repossessions is certainly on the rise with over 40,000 homeowners affected in 2008.
The Council of Mortgage Lenders, who released these statistics, is also forecasting that there will be a colossal 75,000 homes being repossessed in 2009 due to the current economical climate.
The CML is made up of banks, building societies and other lenders and are responsible for 98% of UK residential mortgages.
They were keen to offer encouragement to those concerned by the prospect of having to hand in their keys; “both lenders and government are continuing to find more ways to help people stay in their homes”, said Michael Coogan, Director General of the Council.
“We are working closely with government and advice agencies to try to simplify the information available, and ensure that those borrowers who may qualify for help get access to the information and advice that they need at the right time.”
With many borrowers resorting to abandoning their homes because of increasing arrears, Mr Coogan is urging homeowners to contact their lender before making such radical decisions and believes that abandonment could potentially be avoided with more collaboration.
“Borrowers are still liable for their debt, even if they leave their property, so working through their problems is much more likely to be in their best interests.”
The number of repossessions last year fell short of the CML’s predictions by 11%, demonstrating that homeowners are not willing to let go of their home quite so easily and are more than prepared to work overtime to pay off looming debts.
Therefore, it comes as no surprise that over 180,000 mortgages now have arrears of at least 2.5%, meaning that they are struggling to bring in the required funds to ensure they still have a roof over their head at the end of the day.
Nevertheless, a reduction in mortgage rates late last year saw the number of people in this category of arrears drop from a decadal pinnacle of 219,100, giving hope to homeowners up and down the land suffering from overdue debts.
To put that in to context, one in 64 homeowners are currently £2,500 or more behind on monthly mortgage repayments for every £100,000 they borrowed to pay for their house. On average, that will equate to two to three months of overdue payments, with 220,000 borrowers having at least three months worth of arrears.
There are currently 11.7 million mortgages in the UK, with loans accumulating to a grand total of no less than £1.2 trillion.
By Jamie Bradley
For further information on this story, visit the CML’s website or follow the link provided: Arrears and possessions in 2008
