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Fears for households under strain as repossessions rise

There are fears for the financial resilience of UK households after figures showed an increase in the number of properties being repossessed.

Figures from UK Finance showed a 15% increase in the number of properties being repossessed during the second quarter of this year – April to June – when compared with the previous year.

During the quarter, there were 1,270 repossessions of mortgaged properties, compared with 1,100 in the same period in 2018.

But this year’s figure is lower than the 1,390 repossessions in the first quarter of 2019 and well below the tens of thousands per quarter seen during the financial crisis and recession from 1990-91.

In separate data, the Ministry of Justice said the number of claims made by lenders to repossess mortgaged properties has surged to its highest since late 2014.


The figures, also from the second quarter (April to June), showed the number of these claims in county courts had increased by 39% to 6,179.

It comes despite low unemployment, wage growth and low interest rates on borrowing, leading some commentators to worry about the strain on households.

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The household savings rate – how much of a household’s disposable income is saved – is near a record low and a survey of 13,000 adults by the Financial Conduct Authority last year found that 13% of people in the UK have no savings.

Tim Waterlow, development director of mortgage provider Responsible Lending, said: “Such a large jump, topping the year on year rise seen in the final quarter of last year, raises fears serious financial strain among households is on an upward trajectory once again.”

The UK Finance figures also showed there were 75,890 homeowner mortgages (0.84% of all residential mortgages outstanding) in arrears of 2.5% or more of their outstanding balance in the second quarter of 2019.

This was a 3% decrease compared with the same period in 2018.

The number of actual repossessions was still below the rates seen during the financial crisis and during the recession, when they were more than 25,000 per quarter.

There were 4,660 buy-to-let mortgages (0.24% of all buy-to-let mortgages outstanding) in arrears of 2.5% or more of the outstanding balance in April to June 2019, 5% more than in the same period in the previous year.

Jonathan Harris, director of mortgage broker Anderson Harris, said borrowers should plan ahead and consider how they would cope if interest rates increased.

“Repossession is devastating and any borrowers struggling to repay their mortgage should keep their lender in the loop,” he said.

“Lenders are being flexible and showing forbearance but it is much easier and less stressful to come up with solutions early on than further down the line when options may be much more limited.”


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