The Council of Mortgage Lenders announced today that repossession levels were lower in 2013 than in any year since 2007. Some 28,900 homes were repossessed last year, which represents 0.26 per cent of outstanding mortgages.
This is not surprising, with rock-bottom interest rates and improving employment numbers, as well as lenders being prepared to be flexible and show forbearance.
However, there are still tens of thousands of homeowners being repossessed each year, which begs the question: what will happen when interest rates do start to rise? How will people cope? We suspect that when it comes to their finances there are many people teetering on a knife edge and rate rises could easily push them over.
Unexpected events often cause problems when it comes to paying the mortgage. The flooding which has hit much of the country could be one such factor so RBS’ decision to allow homeowners affected by flooding a three-month repayment holiday on their mortgage is welcome. Other lenders should follow suit and borrowers should ask their lender whether it would consider doing something similar if they are at all worried about finding the extra cash to make good the damage caused by the floods.
Even if flooding is not an issue, it’s important that borrowers keep their lender in the loop if they are struggling with their mortgage. It is much easier and less stressful to come up with solutions earlier on than further down the line when the options may be much more limited.