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Affordability problems fuel repossessions rise
13 May 2008 10:30
The recent increase in the number of troubled borrowers being ordered to give up their homes is wholly due to the rise in the cost of their mortgages, one broker has claimed.
Latest figures from the Department of Justice have revealed that repossession claims rose by 16 per cent year-on-year over the first quarter to 38,688, while repossession orders climbed by 17 per cent from the same period of 2007 to 27,530.
Firstrung's operations director Paul Holmes has attributed this trend entirely to affordability issues, pointing out that although the base rate is fairly low at five per cent, lenders' standard variable rates are on average another two per cent higher than this.
He explained that the house price boom had been accompanied by a flurry of mortgages priced at around one per cent below the base rate and that borrowers now coming off of these products are finding their repayments rising by up to 35 per cent in some cases.
The government has itself recently urged lenders to give borrowers on fixed-rates enough notice before their repayments change, while the National Consumer Council has called on them to offer tailored solutions to customers with payment problems.
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