Figures released by the Council of Mortgage Lenders (CML) show that mortgage repossessions are at an all-time low. In the three months leading up to the end of June this year, there were 92,500 mortgages in arrears of at least 2.5% of the balance – 13.4% lower compared to the same period last year, and the lowest level on record since the Council began recording figures in 1994.
Home seizures are also in decline – there were just 1,300 homeowner repossessions and 500 buy-to-let repossessions for the same period.
If the figures continue to follow the trend for the rest of the year, 2016 will have the lowest annual total since 1982. In 1982 there were just 6.5 million mortgages, compared to the 11.1 million mortgages that exist today.
The low levels of mortgage arrears and repossessions could be due to a number of factors. Low interest rates have resulted in better deals with more affordable payments; and lenders have been slower to take repossession action where borrowers have been struggling.
Director-general of the CML Paul Smee thinks that while borrowers have been given priority to their mortgage payments, lenders have been more committed to helping them through periods of difficulty where possible. Lenders have been seen to adjust payment terms or suspend payments through difficult times, after regulators have encouraged them to avoid repossessions after the financial crisis. High rates of employment have also contributed to the promising figures.
The recent interest rate cut by the Bank of England is likely to provide further comfort to those on variable mortgage rates, where lenders pass on the reductions. A good number of lenders – including Barclays, HSBC, Nationwide, the Royal Bank of Scotland and Santander – have all sad they will be passing on the full 0.25% saving to borrowers on Standard Variable Rates (SVRs), together with those on trackers.
While mortgage repossessions are down, the number of households evicted from rented accommodation increased for the same period by 1%. There were 10,467 repossessions of private rented homes from April to June, compared to 10,372 for the same period in 2015, according to the Ministry of Justice. In England alone, 22,592 households were evicted from private rented accommodation over the past 12 months, an increase of 88% compared to five years ago, according to Shelter. Shelter attributes this growth to the “terrible impact” of welfare cuts and “chronic lack” of affordable homes.
Could you benefit from switching mortgages?
The recent interest rate cuts have meant that there are even more amazing deals to be had on the mortgage market. However, many stay put, believing that early repayment penalties and arrangement fees will outweigh the savings of switching their mortgage to a better deal. If you’re wondering whether you could benefit from making the switch, contact our Property Team who would be pleased to advise you on your options.