In the current economic climate, repossessions are in nobody’s interest according to one market expert.
According to Al Elliot at the Homeowners Advice Centre, mortgage lenders should be supporting their customers and look for alternatives to repossessions in a climate such as this, because with falling house prices there is no point in forcing a sale where the mortgage value is unlikely to be reclaimed.
Instead, the mortgage market should change in accordance with the times, and he recommends exploring alternative options such as offering lower repayments in return for a higher equity stake or other options from third parties such as councils or housing assocations.
“Rather than repossessing homes, the lenders could start offering reduced repayment terms in exchange for a larger equity stake.”
Once the market recovers, then customers should be offered the option to either settle their debts or increase repayments.
According to figures from the Council of Mortgage Lenders in October of this year, they expect the total number of repossessions in 2008 to reach 45,000, equivalent to around 0.38 percent of mortgages held in the UK.