The amount of people missing their mortgage repayments or having their home repossessed dropped last year to the lowest level since 2006, revealed figures from lenders.
Last year there were 21,000 repossessions, 26% less than the 28,900 of 2013, and the lowest figure in eight years, found the Council of Mortgage Lenders (CML).1
Of this number, about three quarters of owner-occupied homes were repossessed, the rest were buy-to-let properties.1
Additionally, there were fewer mortgages in arrears at the end of last year than at any time since 2006. Just 1.05% (16,800) of all home loans were in arrears of 2.5% or more of the mortgage cost. At the end of 2013, this figure was 1.29% (144,600).1
The CML said that the two most common reasons for mortgage difficulty: income surprises such as unemployment and interest rates, are both “relatively benign” currently, but it advises homeowners to “keep one eye on the future.”1
Director General at the CML, Paul Smee, says: “No one should be lulled into a false sense of security that the current low interest rates we are experiencing will last forever. Rules are in place to ensure lenders assess future affordability, but these are not a substitute for careful borrowing.
“It is essential for borrowers themselves to have one eye on the future. Think through any borrowing taken on now to ensure it will still be affordable if and when rates rise.”1
Director of mortgage broker Anderson Harris, Jonathan Harris, says that there is worry over how some people would manage rate rises: “We suspect that when it comes to their finances, there are many people teetering on a knife edge and rate rises could easily push them over.”1
A survey conducted by market research company ICM released in late 2014 found that a third of mortgage borrowers believe they will find it difficult to meet their repayments if interest rates increase by 2%.1
Although rates will most likely rise, just 14% of respondents revealed to ICM that they had been making changes to their finances to cope with any potential increase.1
1 http://www.theguardian.com/money/2015/feb/12/home-repossession-lowest-since-2006