House Repossessions At Lowest Levels In 30 Years

Despite the anxieties regarding a slowing market and Brexit implications on the economy, repossessions fell to their lowest levels in thirty years according to recent statistics by UK Finance.

You would need to go back to when Flock of Seagulls haircuts were in fashion to find lower figures than the 4,580 home-owner possessions experienced in 2018.

Whilst 2018 finished with 77,610 home owner mortgages in arrears of 2.5% or more, this represents a 5% decrease on 2017’s figures.

The number of buy-to-let mortgages taken into possession also plummeted by 14% on the previous year, with only 540 taking place in 2018.

Whilst this may read positively, statistics from the Ministry of Justice (MoJ) also highlight that towards the end of 2018, mortgage possession claims had risen by 30% between October and December.

Compared with the final quarter of 2017, repossessions had actually increased by 5% according to the MoJ.

Shaun Church, Director at Private Finance, said: “We may live in turbulent times, but homeownership is remarkably secure, with homeowner possessions at their lowest level in almost 40 years. A sustained period of low interest rates has made repaying a mortgage not only more affordable, but also more predictable. Lenders are also now duty bound to work with any borrowers struggling to repay their loan to put a realistic repayment plan in place.

“Doomsayers will argue that trouble is brewing for when rates do start to rise again. But lenders have stringent tests in place that ensure borrowers can afford their loan if rates rise by a far higher percentage than is likely. This means that, assuming there are no dramatic changes in their circumstances, borrowers should be able to comfortably accommodate slightly higher repayments when rates to begin to creep up.

“The incredibly low level of arrears and possessions makes the case for wider availability of high loan-to-value (LTV) products. Affordability tests are clearly working, and with a secure system in place, there is no reason why loans of 95% or above should present any danger. Saving for a deposit is one of the biggest financial hurdles many will face, and for some is unsurmountable. Better availability of high LTV mortgages would help to remove this barrier and put buyers’ homeownership prospects on a more equal footing.”

Do these figures suggest that trouble is on the horizon for the property market?

1 Comment

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    This is a good news article, but does anyone really believe higher LTV’s or even 100% loans should return anytime soon or ever ? How shortsighted and clearly forgetting the lessons of the past. As a reminder there used to be a bank called Northern Rock (many 20 somethings will never have heard of it) which openly marketed 100 % + loans. When the credit crunch hit these borrowers could not repay their loans and because they had no “skin in the game” simply handed the keys back to the lender. Northern Rock went bust, which was our manifestation of what happened in the US with sub prime lending.

    We are all still paying for these errors and the lesson to be learnt is that people need to save for a deposit and lenders need to ensure they can pay now and in the future when rates will eventually rise back to normal levels – these could be 3 or 4 % which will be more than double what many are paying today.

    So whilst it means its harder for people to get on the ladder, better that than decades of pain for the economy

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