08-04-08, UpMyStreet ©
There will be 123 repossessions every day this year, the Royal Institution of Chartered Surveyors (RICS) predicts – a statistic reminiscent of the property crash of the early nineties. If correct this prediction will be a 50% increase in repossessions, on 2007 alone.
With the credit crunch meaning homeowners are finding it hard to make ends meet, everyone should know the facts about repossession.
Why repossessions are up in the UK
- Irresponsible lending - in the last few years larger mortgages have been made available to home buyers
- The credit crunch - lenders are now being a lot more cautious about who they give credit to
- The housing boom - between 1995 and 2005 house prices rose by 165%, forcing buyers to take out huge mortgages
- The potential property crash - as prices fall homeowners with large mortgages could find themselves in negative equity
The outlook for 2008
In 2007, 27,100 homes were seized and if RICS are right, this number will be far higher in 2008. In the USA - whose market conditions tend to affect the UK - repossessions have gone up 90% in the last year.
However, the Council of Mortgage Lenders points out that in 2007 repossessions only accounted for 0.23% of all mortgages. Also, opinion is divided on how much of a property crisis the UK is facing: RICS have said there is a 10% chance of a price crash, Nationwide say house price growth will have slowed to 0% by the end of 2008 and Assetz believe prices will increase 5% this year.
What you can do to avoid repossession
If you are even only concerned about repossession, start making plans. In the short term you may be able to arrange to reduce your monthly repayments with your mortgage lender.
Also take the time to completely audit your outgoings, as there may be a lot of room for improvement.
For detailed advice on managing your mortgage visit the FSA's Moneymadeclear website.
Dealing with repossession
If your mortgage lender has threatened you with repossession remember:
- It's a long process and there are many chances for appeal
- Don't just give up your home straight away
- Don't sign up with a 'sell and rent back' scheme before fully researching the terms and conditions
- Get advice from an independent organisation such as the Consumer Credit Counselling Service - but never pay for advice
Related articles
Facts about UK debt
These figures from Credit Action suggest it's time for the UK to get real about debt:
- UK debt grows by one million pounds every five minutes
- The average mortgage debt is currently £100,485
- Total UK debt at the end of January 2008 was £1,412 billion
- Average household debt in the UK is £56,708
- £257 million is paid in interest in the UK every day
Debt advice resources
Tracy (Bolton), on 04/07/2008 at 18:05
Biggest mistake of my life buying a house its costs more to keep and the fact is its never yours till you've made them the last payment.It belongs to the mortgage company not you. any repairs have to be paid for by you.Rent its cheaper you get repairs done for you if house needs upgrading they do it for you. life is for living not paying thousands for something that you have more risk losing due to redundancies like we are now facing.Dont put the same stress onto yourself or your kids its not fair on them.
David (South Oxfordshire), on 08/04/2008 at 16:06
The first section on why repossesions are up in the UK provides facts relating to how the housing market has ended up in the current state, not ultimatley why repossesions are up. E.g. Negative equity does not = repossesion?
Reposssion is due to people not being able to afford their repayments - people have borrowed, and have been allowed to borrow, beyond their means. (not considering fluctuating IR's etc)
Your comments (2)
› Add a comment