Last year home repossessions in the UK fell to their lowest annual level since 2007 the Council of Mortgage Lenders (CML) has revealed.
Figures for 2012 have recorded that 33,990 homes were seized through repossession orders last year. What’s more is that figures for the final three months of 2012 also showed the lowest amount of repossessions recorded in any quarter in the last five years.
The CML predicted that repossessions would be in the region of 45,000 for 2012, however this turned out to be an overestimation by more than ten thousand.
The fall in repossession orders is being attributed to a number of factors. Historically low interest rates are a major contributor as repayments on a standard variable rate will generally be lower. In addition, stricter and more conservative lending policies has limited access for sub-prime borrowers.
Another factor that may have influenced the figures is the legal structures that have been set in place to ensure lenders cannot repossess without good cause. Lenders must make a convincing case to the courts that they have done everything in their power to receive payments, whilst also having to prove that repossession is the only remaining option.
The number of homes repossessed has experienced noticeable fluctuations since the economic downturn. Of the 11.3 million homes currently under outstanding residential mortgages in the UK, 2007 saw just 25,000 repossessed. In 2009 this figure nearly doubled to a peak of 48,900, although it has fallen steadily since.
Sir Mervyn King, the governor of the Bank of England, commented that while the UK economy was showing some signs of optimism, the cost of living would remain noticeably high for some time, and was unlikely to change.
The advice from lenders is still one of seeking advice as early as possible, this should provide those in financial difficulty with the support and more importantly, the time to agree upon repayment schedules.
Mortgage broker Jonathan Harris, said:
"Borrowers must seek help, preferably before they miss a payment, speaking to their lender or one of the specialist - and free - debt agencies, such as Citizens Advice.
"It is essential that lenders continue to show forbearance and look after customers who are struggling by switching them to interest only, allowing them to take payment holidays or extend their mortgage terms, where practical."