Large Increase In Mortgage Repossessions
Below is a MRR and PLR article in category Finance -> subcategory Mortgage.
Significant Rise in Mortgage Repossessions
Overview
Recent statistics indicate a concerning rise in mortgage repossessions, with implications for homeowners and landlords.
Key Points
- Statistics: The Department for Constitutional Affairs reports that court actions by mortgage lenders increased to 28,476 in the second quarter of this year, marking a 50% rise from the previous year. The number of repossession orders, at 18,330, is the highest in nine years.
- Historical Context: Although not yet reaching the peak of around 40,000 repossessions in late 1991, this trend is alarming for both homeowners and landlords. Many have become accustomed to rising property prices and low interest rates, often borrowing against increasing equity.
- Economic Concerns: The surge in house prices has masked underlying economic issues, with consumer borrowing supporting the economy. As house price inflation slows or reverses, many find they lack assets to borrow against. The UK's limited industrial base and dependency on the service sector also pose risks.
- Implications for Landlords: While a dramatic price collapse like that of the early 90s seems unlikely due to housing demand, a severe economic downturn could lead to increased reliance on government-supported rent payments. This situation presents challenges for landlords who avoid tenants on housing benefit.
- Opportunities with Housing Benefit: Accepting tenants who rely on housing benefit can provide a stable income stream, akin to consistent demand and reliable payments. Proactive landlords who embrace this approach may fare better than those who do not.
In conclusion, while the rise in repossessions is worrisome, landlords can adapt by being open to tenants on housing benefit, which may help navigate potential economic downturns.
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