Number of repossessions and arrears fall dramatically

Fri, 13 Feb 2015

Number of repossessions and arrears fall dramatically
The number of homes repossessed last year fell to the lowest rate since 2006, before the economic crash, according to the Council of Mortgage Lenders (CML).

The trend continued through other aspects of mortgage payments, as less mortgage borrowers fell into arrears last year too.

This is most likely due to the low interest rates on mortgages at the moment, as well as the rise in long term fixed rate mortgages that stop people being surprised by interest rate changes.

21,000 homes in the UK were repossessed last year, 26 percent lower than the number repossessed in 2013.

However, this is worrying some experts who don't feel these good times can last. We have been promised a sharp increase in the Bank of England's base rate since halfway through last year, and despite the fact it has been postponed, it is still inevitably on the horizon.

On average, there seems to be a much larger number of people coping with payments now, but this could turn around and become a much larger number of people struggling, and even failing, to make their mortgage payments when the rates jump up.

In general, people who used the Help to Buy scheme are first time buyers and will have a generally lower income. These people could become vulnerable to the base interest rate jump.

The housing market is a great one to buy into right now, with very low interest rates and long term fixed rate offers, if buyers have enough savings to pay for a much larger deposit to get the best deals and to give security.

However, if they don't, the future may be precarious, and the numbers of arrears or repossessions could drastically rise along with the Bank of England's base rate.
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