Why home repossessions are at a record low
The number of houses being repossessed by banks plummeted to
a record low in the second quarter of this year, according to Zoopla.
a record low in the second quarter of this year, according to Zoopla.
The Ministry of Justice (MoJ) said the “unprecedentedly low
levels” of possessions were due to government measures introduced to help
homeowners by forcing lenders to offer mortgage holidays during the coronavirus
pandemic.
levels” of possessions were due to government measures introduced to help
homeowners by forcing lenders to offer mortgage holidays during the coronavirus
pandemic.
The were no homes repossessed in the three months from April
until the end of June, according to the MOJ. The number of mortgage orders for
possessions dropped by 96% to just 149. Mortgage possession claims fell by 97%
to 161.
until the end of June, according to the MOJ. The number of mortgage orders for
possessions dropped by 96% to just 149. Mortgage possession claims fell by 97%
to 161.
Landlord possession claims also fell by 89%.
The government
introduced a number of measures to enable people to stay in their homes even if
their incomes were hit by the Covid-19 pandemic after the UK first entered lockdown in March.
introduced a number of measures to enable people to stay in their homes even if
their incomes were hit by the Covid-19 pandemic after the UK first entered lockdown in March.
The Financial Conduct Authority (FCA) advised homeowners and
landlords in difficulty to apply for a three-month mortgage payment
holiday.
landlords in difficulty to apply for a three-month mortgage payment
holiday.
The government passed the Coronavirus Act, which put a
temporary halt on all repossession activity, initially for three months, and
later until 23 August this year. The government extended
the ban on landlords evicting tenants on Friday, two days before it was due
to end.
temporary halt on all repossession activity, initially for three months, and
later until 23 August this year. The government extended
the ban on landlords evicting tenants on Friday, two days before it was due
to end.
Landlords are unable to start eviction proceedings against
tenants even if they are anti-social or in arrears their rent.
tenants even if they are anti-social or in arrears their rent.
Figures reveal that two million homeowners and landlords
applied for a mortgage payment holiday since the initiative was first launched.
applied for a mortgage payment holiday since the initiative was first launched.
Repossessions and tenant evictions will resume in large
numbers once support measures come to an end, but there will be huge backlogs
and long delays in enforcing court orders.
numbers once support measures come to an end, but there will be huge backlogs
and long delays in enforcing court orders.
A tenant could probably get away without paying rent for
another year before an eviction took place.
another year before an eviction took place.
If your mortgage payment holiday is coming to an end and
are worried about paying your mortgage you should talk to your lender and avoid
burying your head in the sand. Open those letters!
are worried about paying your mortgage you should talk to your lender and avoid
burying your head in the sand. Open those letters!
In theory, lenders can voluntarily offer repayment holidays
for a limited period and could accept reduced repayments or switch you over to
an interest-only mortgage, which would substantially cut your monthly payments.
for a limited period and could accept reduced repayments or switch you over to
an interest-only mortgage, which would substantially cut your monthly payments.
You could ask your lender to extend your mortgage term, which
can make your monthly repayments smaller, although the total amount repaid over
the term would increase.
can make your monthly repayments smaller, although the total amount repaid over
the term would increase.
Low interest rates have prevented hundreds of thousands of
mortgage borrowers from losing their homes since the last financial crisis. In
the previous four recessions, interest rates shot up to record levels and
repossessions and bankruptcies went through the roof.
mortgage borrowers from losing their homes since the last financial crisis. In
the previous four recessions, interest rates shot up to record levels and
repossessions and bankruptcies went through the roof.
The trade body, UK Finance, has urged homeowners to resume
full mortgage payments if they can afford to do so, and you don’t really want
mortgage arrears on appearing your credit file.
full mortgage payments if they can afford to do so, and you don’t really want
mortgage arrears on appearing your credit file.
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