MortgagesNov 9 2017

Repossessions on the rise

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Repossessions on the rise

Repossessions have risen from their historic low despite a fall in the number of arrears, according to UK Finance.

The number of properties repossessed in the third quarter rose to 1,900 – up from 1,800 during the previous quarter, which was the lowest since the recording of quarterly data began in 2008.

Repossessed owner-occupied properties increased for the first time since the second quarter of 2015, rising from 1,100 to 1,300, while buy-to-let repossessions fell from 700 to 600.

Meanwhile, the number of mortgages in arrears fell across all bands, apart from those owing 10 per cent or more of the outstanding balance, which edged up by 0.4 per cent from 25,500 to 25,600.

Owner-occupied mortgages in arrears of 2.5 per cent or more of the balance totalled 83,300, down two per cent from 85,300 in the second quarter.

Mirroring the wider market, owner-occupied arrears declined in all bands apart from those owing 10 per cent or more of the balance, with the total in this category edging up from 24,400 in the preceding quarter to 24,500.

The number of buy-to-let mortgages in arrears climbed by two per cent to 5,100 – up from 5,000 in the second quarter.

UK Finance’s head of mortgages policy June Deasy said: “Even a small rise in mortgage possessions is disappointing but, after a long period of declining numbers, it was inevitable that they would rise again at some stage.

"Both arrears and possessions remain low by historical standards and look set to be lower for the year than we predicted at the start of 2017."

Jonathan Harris, director of mortgage broker Anderson Harris, commented: “Worryingly, possessions are on the rise, albeit from an historically low level. These numbers do not reflect the recent interest rate hike, either, and with more rate rises a possibility, home repossessions may well increase further.

“Clearly, there is no room for complacency. Possessions have long been declining but that can change and borrowers need to be prepared. We suspect that when it comes to their finances there are many people who don’t have a buffer to tide them over should they get into difficulty.

“Borrowers must plan ahead and consider how they will cope if interest rates do rise further. Fixed-rate mortgages are great value, even though lenders have slightly raised the pricing on these. It is also vital that borrowers keep their lender in the loop if they are struggling to pay their mortgage. 

“Lenders are being flexible and showing forbearance, but it is much easier and less stressful to come up with solutions early on than further down the line when options may be much more limited.”

simon.allin@ft.com