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Behind With Mortgage

Behind With Mortgage

Behind With Mortgage

According to the FCA, there are currently more than 14000 MORE households that are behind with their mortgages than what there were in 2008. We have seen repossession rates drop, however, if we see a rise in interest rates then this could change, drastically.

We are seeing that more families are struggling to keep up with their bills more so than at the height of the financial crash, according to the UK financial watchdog, according to a review published.

As part of a thematic review published today, the Financial Conduct Authority found that there are 14,000 more households in serious arrears of more than 12 months than there was in 2008. This news hit follows mortgage rates being at record lows with the regulator’s warnings about repossessions if interest rates were to raise.

According to Jonathan Davison, executive director of supervision, retail and authorisation at the FCA ‘In 2008, the number of homes in serious arrears, of more than 12 months, was 56,000. The repossession rate per year was 22 per cent.

‘We found that the number of homes in serious arrears has risen to 70,000, but repossession rates per year have dropped to 2.7 per cent.

‘It makes sense [for banks] to forbear when interest rates are low. If interest rates start to go up, I’m afraid the repossessions will also rise.’

We are seeing lenders repossessing fewer and fewer houses, there will naturally be a rise in arrears.

As lenders repossess fewer houses, the number of homes in arrears will naturally rise – and the number of repossessions in the UK at the moment is historically very low. We are seeing on average about 140 homeowners a week losing their house. This figure is a fraction of the number of repossessions recorded in 2009 where we were seeing 940 people a week falling behind with mortgages.

Besides the fall in repossessions, what is causing people to fall behind with their mortgage? One key change that we have seen is the conversion of the state benefit. This was a benefit was for people on income-related employment and support allowance. This used to mean that the government paid the interest on their load direct to the lender. Those on the benefits, saw this come into play after a 39-week waiting period on loans up to £200,000.

However, as of April, the benefit is treated as a loan with a variable interest rate of 1.7 per cent. The loan must now be repaid when the property is sold or when the borrower dies.

At the time, experts warned that uptake on the loan had been low, predicting a higher number of households going into arrears as a result.

FCA has discovered that some of the top high street banks are not doing enough to safeguard those borrows are not in arrears. This includes those that are vulnerable and helping to provide them with the right amount of support. 

They have discovered that many of the records have been incomplete and that insufficient information has been provided. This means that some customers have had repeat circumstances on several occasions when behind with their mortgage.

The research that was done by the FCA looked at eight banks in total, that cover roughly 40% of the market. Their research has caused them to consider regulatory action against one or more of the subject banking firms.  

It can be a daunting experience to try not panic when you are behind with your mortgage. It’s always best to approach things as early as possible to avoid repossession. Read more on how to stopping house repossession.

UK Government Website

Free independent repossession advice from the UK Government.


Citizens Advice

The advice guide website is the main public information service of Citizens Advice, providing people with round-the-clock access to CAB information on their rights.


National Debtline

A free, independent and confidential debt advice service run by the charity Money Advice Trust.


Shelter

Shelter is a charity that works to alleviate the distress caused by homelessness and bad housing.


Your Local Council

Find the contact details and website for your local council.


Step Change

Free advice on problem debt based on what’s best for you.


Pay Plan

Free debt management plans, IVA’s and debt advice.

 



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