Research suggests that more UK homeowners could be unable to stop repossession.
A report in the Daily Mail newspaper suggests that the repossession crisis in 2008 could be even worse than the one in 1992. The property bust of the early nineties claimed many victims, and in 1992, 75,000 homes were unable to stop repossession. Initial estimates for 2008 were about half that figure, but now new research published in the Mail suggests more homes are at risk of being unable to stop repossession now than they were in 1992.
Stop Repossession – Worse than 1992?
The news report states that research published by a leading insurance company suggests up to 1.8 million home buyers are at risk of struggling to meet mortgage repayments by the end of 2008. In 1992, the figures were less, despite the fact the UK was in the grip of recession with mortgage interest rates at 15%. It's thought the increase of home owners at risk of being unable to stop repossession is down to the fact that there are simply more mortgages in Britain – around 11.82 million, a rise of around 2 million from figures in 1992.
Redundancy increases Repossession Risk
This means if home owners are subjected to redundancy, illness, divorce, bereavement or debt problems, there's a wider pool of people who are vulnerable to repossession risks. The leading insurance company that undertook the research, AXA, told the press: "Many homeowners are stretched to the limit already to meet mortgage repayments, so would struggle if they were suddenly unable to work" The analysis by the insurance giant showed that if mortgage arrears at the end of the year were just half of those recorded in 1992, 200,000 homes will be experience mortgage payment problems, "...leading potentially to much higher rates of repossessions and bankruptcies." If they're right, a record number of people in the UK struggling to repay home loans might be unable to stop repossession.
Lending Boom Leaves more Vulnerable to Repossession
Fast house sale schemes and the sell and rent back industry are expected to boom as more people find more attractive alternatives to repossession or try to stop repossession in its tracks. As the economy struggles, redundancies could rise, and yet many people don't have mortgage protection – putting them at risk of arrears and repossession. One startling fact is that the average mortgage in 1992 was around 2.5 times a person's salary, now, after a decade of easy credit, there are mortgages up to six times a person's income. This huge stretch in affordability puts more at risk of being helpless to stop repossession without the help of the fast house sale industry.