According to a report by the Council of Mortgage Lenders (CML), the number of properties repossessed in 2016 fell by 25% to the lowest figure in the last 35 years.
Just 7,700 homes were repossessed last year in the UK, as the owners had fallen into significant arrears with mortgage payments. In 2015, the number of repossessions was 10,200. Last year, 94,100 households had fallen into arrears with mortgage payments, 7,600 less than in 2015, according to CML.
According to experts, this is due to high rates of employment and low interest rates. Lenders have also been willing to help borrowers find ways to make their mortgage repayments, rather than moving immediately to a repossession.
CML stated that it was possible that a number of repossessions had been delayed, due to lenders having to review their procedures, following a lengthy court case. The fall in repossession numbers is good news for homeowners, as large numbers of homes being repossessed often results in property prices falling. However, CML warned against complacency, as it is possible that some homeowners are only just managing to meet their monthly repayments, and if interest rates rise in the near future, they could be plunged into a financial disaster.
As low interest rates came into being in 2009, there are some homeowners who have never faced higher interest rates, and may find it difficult to cope with an interest rate increase. CeMAP qualified mortgage advisers can advise borrowers prior to buying a home, to ensure that they can cope with an increase in interest rates.
