Credit, Collections & Insolvency News
UK Finance has published its Mortgage Arrears and Possessions Update for the fourth quarter of 2018, which saw 4580 homeowner possessions in 2018, the lowest level since 1980 when there were 3480 possessions. During this period, there were 6.2 million outstanding homeowner mortgages, compared to 9 million at the end of December 2018. The data also reveals there were 77,610 homeowner mortgages in arrears of 2.5 percent or more of the outstanding balance, 5 percent fewer than in the same quarter of the previous year.
Commenting on the data, Jackie Bennett, Director of Mortgages at UK Finance said “Mortgage arrears also remain at historically low levels, with the majority of borrowers continuing to repay their mortgages in full and on time each month.”
“We would always encourage anyone with concerns about making their mortgage repayments to contact their lender to discuss the options and support available to them. Repossession is always a last resort.”
Mark Pilling, Managing Director of Spicerhaart Corporate Sales, who deals with arrears and repossessions on behalf of lenders, says it could be the start of a more permanent shift, and warns that North/South divide could get worse.
Pilling said “The latest mortgage and landlord possession statistics show that after years of falling possession rates, all mortgage possession actions have increased, with mortgage possession claims up 30% to 5,648 – that is more than 15 a day. Orders are also up 29% and warrants are up 30%.
“And while it is probably too early to say if this is a reversal of the downward trend or just a temporary fluctuation, the most recent mortgage lenders and administrators showed that mortgage arrears had increased for the first time in two years. So when you consider both sets of stats, plus the fact many people are now relying on credit cards for everyday purchases (credit card debt is at record highs) this could be the beginning of a more permanent trend.”
“The data also reveals that there is still very much a North-South divide, with five of the highest repossession rates in the North. Middlesbrough was the highest, with 53 per 100,000 households, followed by Barrow-in Furness and Blackpool. The North also had the highest rates of actual repossessions, and while arrears and possessions have always been higher in the North, over the next few years, it could get even worse. We have already seen a number of new ‘hot spots’ such as Manchester and Blackpool, and as people look to move out of London we could see house prices pushed up even further, impacting affordability and therefore arrears and possessions.”
“Repossession should always be the last resort and lenders should always look to find another option if it is available. We can help lenders find solutions that best suit them and their customers, so it is important that lenders start looking at all their borrowers and identify those who are already having difficulties managing their mortgage or are likely to.”