Many struggling families are going to be forced to the wall as the consumer squeeze results in a sharp rise in home repossessions, thousands of families in Britain will be affected. Economists fear that because incomes are failing to match inflation and unemployment is going to increase sharply due to the Government cutbacks, which will now begin to bite, the repossession rates will rise quicker than previously thought. Many believed because of the low interest rates and the lower than expected unemployment figures that repossessions would not be as high as once predicted but now this is all set to change.
The Council of Mortgage Lenders is forecasting that there will be a 22% increase in repossessions for this year, with figures rising to 45,000. However they feel that if unemployment figures rise sharply or the economy does not do as well as expected then the repossession figures would jump a great deal higher than this. This equates to morbid reading for Britains homeowners who are already struggling with their mortgage repayments.
Mortgage lenders feel that they are doing their best to help those struggling with their arrears by exercising forbearance or even restructuring their loans but the sub-prime lenders, those who lend to individuals who are less financially stable, are a lot less willing to help their borrowers. The Citizens Advice Bureau has noticed an increase in those borrowers who have fallen into arrears now facing possession orders. Also because the rules have changed in regards to support for mortgage interest for those who have lost their jobs, the increase in possession orders is simply going to increase further. The Bureau feels that lenders should go further to help their borrowers out of their problems but the squeeze on peoples incomes is having a dramatic effect.
In 2011 there was increase in homes being repossessed compared to 2010. Many feel that repossessions were contained at fairly low levels through the economic downturn because of the low interest rates and low unemployment. This will now change. Lenders will continue to offer forbearance but with unemployment rising and the cost of living going up and up the number of repossessions can only increase. Analysts feel that rises in repossessions will be inevitable due to the fact that we are in a recession, this is what happens during these times but the main thing is to manage the situation as best we can, interest rates will need to be kept at an all time low but unemployment needs to controlled also. However with cuts in the public sector coming into force in 2012 it seems that many homeowners will struggle to keep up with their repayments.
The reason that those borrowers from sub-prime lenders will be hit harder first is due to the fact that many borrowed more than they could afford in the first place. The blame should lie on both sides, both with the sub-prime lenders and with the individuals. If the sub-prime lenders are being less than helpful to those individuals who are struggling then the increase in repossessions will most likely be in this CatID of borrowers.
Fiona Davies is a director at The Property Fairy.
She has worked in the land and property sector for the last ten years.
All articles on the website are written uniquely by her.
This article is copyright free.