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Repossession rate drops to lowest level since 1980

By Ryan Bembridge

Published: 18th February 2019 Last updated: 18th February 2019
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The number of UK repossessions fell to just 4,580 in 2018, the lowest amount since 1980.

This result, revealed by trade body UK Finance, can be explained by a number of factors.

The continued low interest rate environment from the Bank of England has resulted in affordable mortgage rates, making it easier to keep up with repayments.

And what is more, the stress tests introduced by the Financial Conduct Authority in the Mortgage Market Review in 2014 mean that most new homeowners should be capable of keeping up with repayments even if interest rates rise.

Tougher rules were also introduced for buy-to-let in 2017 by the Bank of England, where landlords need sufficient rental income to cover mortgage payments and more if interest rates rise.

Repossessions are a last resort

Responding to the results, UK Finance’s director of mortgages Jackie Bennett said the low repossession count is aided by “lenders showing continued flexibility when working with borrowers in financial difficulty”.

Most lenders give their borrowers a lot of leeway if they fall into arrears, which may happen due to a temporary change of circumstance, if you lose your job for example.

That’s why if a life event happens and you’re unable to afford your mortgage payments you should contact your lender immediately to find a way forward.

The Financial Conduct Authority has articulated to lenders they should only repossess people as a last resort, so even if you fall into serious arrears you should be able to keep your house if you work through issues with your provider.

Arrears count

There is a divide between the number of people who fall into arrears and those who actually get repossessed.

Between October and December alone there were 77,610
homeowner mortgages in arrears of 2.5% or more of the outstanding balance, 5%
fewer than in the same quarter of the previous year.

Meanwhile over the same period there were 4,690 buy-to-let mortgages in arrears of 2.5% or more in the fourth quarter.

In terms of more serious cases, in the fourth quarter of 2018 there were 22,680 homeowners in arrears of 10% or more, as well as 970 buy-to-let mortgages in serious arrears of over 10%.

Don’t get complacent

While you shouldn’t get complacent about getting repossessed, these are positive results for the market.

With the current anxieties about UK economy and house prices owing to the UK’s departure from the European Union, it’s heartening that even if you fall behind on repayments, losing your home is becoming rarer.

While the figure of 4,580 seems large, once you take into account that there are just over nine million homeowners with mortgages in the UK you realise this is an extremely low proportion of households.

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