Are house repossessions set to rise?
This guest post from freelance writer Patrick Vernon asks are house repossessions set to rise?
House repossessions are horrible for all concerned. Housing companies and lenders will look for every opportunity they can take to enable owners to keep their homes and pay their mortgage, therefore stopping repossession, but there has to be a breaking point. What’s more, despite recent encouraging figures, the number of people losing their homes could be set to rise.
First of all, of course, one has to actually get onto the property ladder in the first place. The property market has never been the same since 2008 when the sub-prime market fell apart, which dragged banks and lenders down into a worldwide quagmire. Measures were put in place to make it harder to borrow for a home, and many teenagers and millennials will say that this has wrecked their chances of ever buying.
However, the more stringent measures seemed to have worked. In 2016, the Council of Mortgage Lenders (CML) announced that the total number of repossessions in the UK was at its lowest level for 34 years. A drop of 2,500 repossessions, from 10,200 in 2015 to 7,700 a year later, was good news. A low interest rate (based on the Bank of England base rate of 0.25%) is helping to keep monthly payments achievable, and correlated with the number of mortgages in arrears dropping by 7% to 94,100.
So everything is good, but as is common in life things can sometimes trot along and throw a rock into the middle of the pool. Two decisions from last year – one taken on this side of the Atlantic, and one taken on the other, both by the electorate could fill the role of the rock. The full effects of Brexit and Donald Trump are not yet known, but there has certainly been an effect on the currency markets.
The upshot is that, in markets where the pound is suffering, we may have to pay more for our everyday items that are imported from across the world. Europe could be in for a turbulent year; while the status quo seems to have been maintained in Holland, Germany might have a new leader by the end of 2017. France definitely will; Francois Hollande is not standing. The fear for many is that the populist National Front will attain power for the far right, which would send out a powerful and provocative message and one that threatens the loose stability of the European markets.
If people are spending more per month on the normal, non-luxury items in life, with no discernible rise in income, then it is inevitable that debts will rise and that leads to an increased risk for mortgage payments. The CML has stated that it believes repossessions could rise back to the level of a year before, of around the 10,000 mark. While this is obviously concerning, it is hardly as desperate as the situation several years before; in 2009 there were a desperate 47,000 repossessions and 166,000 households in arrears.
It’s difficult to predict; ask anyone who’s conducted a poll in recent years and they’ll tell you that. If we had gone with the bookies, we’d now probably have another coalition government, still ensconced in the EU, with Hilary Clinton in office. It didn’t happen, and neither might the repossessions. Perhaps our prudent spending patterns will mean that repossessions will continue to fall – let’s hope so.
Patrick Vernon is a freelance writer, specialising in business and finance related content. Patrick has gained experience writing for a variety of magazines and websites, researching the latest money making tips and offering his advice to the public.