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?