Brokers discuss the latest data from Scottish Labour
An estimated 61,410 households in Scotland are facing difficulties with debt repayment, putting them at higher risk of repossession, according to data from Scottish Labour.
With this in mind, experts discussed the potential reasons behind Scotland’s struggling market, approaches to recovery and whether they believe Scottish Labour’s analysis to be accurate.
Struggling market
Patricia McGirr (pictured left), managing director at Finanze, said the whole of the UK is seeing the cost-of-living bite hard into what were once relatively secure home finances.
“Recent figures show many homeowners are struggling with increased mortgage payments,” she said.
McGirr believes that Scotland’s specific housing struggles may well stem from a combination of factors, such as job uncertainty and regional economic disparities.
The reasoning behind this, she said, could include a slower post-recession recovery, unique supply-demand imbalances, and varying policies affecting housing affordability.
“Tackling debt on this scale requires a comprehensive approach ranging from targeted financial assistance and rental support to addressing regulatory hurdles,” McGirr said.
As such, she said it is crucial for policymakers to collaborate across sectors and levels of government, to create sustainable solutions that provide security and stability to those at risk of repossession.
Christian Duncan (pictured right), managing director at Manchester Mortgage Centre, agreed with McGirr that the impact of the increased cost-of-living is hitting finances hard.
He believes mortgage firms must have lengthy discussions with clients to see how they can help them avoid falling into financial difficulty, such as repossession, in the coming weeks, months and even years in some cases.
Given Scottish Labour’s analysis of current market conditions, Duncan added that building financial resilience with clients is paramount, especially considering the introduction of Consumer Duty.
He also believes that the UK housing market is heading for some big changes in the near future.
“Houses towards the top end of the market will suffer due to the reduced finances of buyers, and the smaller properties at the bottom end of the market will become more popular, leaving them out of reach for the people who need them most,” he said.
As a result, Duncan believes more schemes to help low-income earners get on to the property ladder are needed quickly.
Hard to fathom
Meanwhile, Ross McMillan, owner and mortgage adviser at Blue Fish Mortgage Solutions, said it is hard to fathom where Scottish Labour’s prediction stems from.
“As the mortgage charter has been adopted by the majority of lenders, the route to repossession is even more difficult than it already was, with most lenders incredibly reluctant to pull that particular trigger as anything other than a last resort,” he said.
In Scotland, McMillan said the reality is the housing market has proven to be more robust than in many other areas of the UK, and, in fact, has seen average price rises in many areas, as opposed to consistent falls like in most other regions of the UK.
The persistent lack of supply while demand and mortgage availability has remained strong, McMillan said, has meant that the market in Scotland shows no real signs of weakening, particularly in the critical first-time buyer market.
“The rental market, as a result of ill-conceived government interventions, has seen rents increase more than elsewhere in the UK, and so this factor has also contributed to a healthy and competitive purchase market in Scotland,” he added.
Why do you believe repossessions in Scotland have risen above other regions in the UK? Let us know in the comment section below.
