Home repossessions are up 50%
Home repossessions rose by 50% in the first quarter of 2023, with over 1,000 homes seized due to homeowners struggling to keep up with mortgage repayments, according to the latest UK Finance data.
An estimated 750 mortgaged properties were repossessed and 410 buy-to-let mortgaged properties were taken in Q1.
The data also revealed that there were 76,630 homeowner mortgages and 7,030 buy-to-let mortgages in arrears of 2.5% or more of the outstanding balance, representing a 2% and 16% increase respectively on the previous quarter.
With this in mind, Mortgage Introducer spoke with brokers to uncover how affected customers can be supported and what options are available for them.
Supporting customers
Austyn Johnson (pictured), founder at Mortgages For Actors, said his business keeps in touch with its clients through a yearly review - or a quarterly review if they did not want protection straight away.
“We also like to ensure that the client knows that we are here if they are struggling; it is not worth just leaving people out in the wild after you have been paid, and it is not morally ethical either,” he said.
Jonathan Burridge, founding adviser at We Are Money, said the stress of a property possession does not end when you are forced to vacate.
“I know from personal experience that the emotional pressure remains long after the property has been sold, generally below value and there is no guarantee the borrower will be free of the debt,” he said.
Lenders do not take these steps lightly, and Burridge said it is their final resort usually after a prolonged period of non-payment and when no other option is viable.
However, Burridge said the impact on the borrower and their family is enormous and they may have been under financial stress for over a year before the order is granted and it could take another year for the possession process to conclude.
“The best advice I can offer is to engage with the lender and work them, this will reduce the stress,” Burridge said.
He believes it is in the customer’s best interest to try and remain positive in order to find a solution with a clear head.
“It may not seem it at the time, but, it will pass and life will improve; do not be proud, ask for support, it has happened to many people for many reasons, you are not alone,” Burridge said.
Time to speak up
James Vince, managing director at Castle View Finance, said with debt-to-income levels high due to years of cheap and available money, it is natural that we see an increase in defaults, arrears and legal proceedings.
Vince said there are several support functions available within the wider community, with Citizens Advice being a good starting base.
“The issue in the traditional stiff-upper-lip British culture is ‘we do not worry about it’ and ‘we certainly do not discuss our affairs with those around us’; this is a part of the problem,” Vince said.
As such, he said people do not reach out for help until it is too late in many cases, which is why repossessions are on the rise.
“We should share with friends and family, we should speak and open up to the creditors, and we certainly should seek advice from professionals when money worries and challenges become evident,” Vince said.
Due to spiralling living costs in all areas, Vince said we will see increasing challenges but he believes options such as second charge lending, remortgaging, downsizing and equity release could help to support people before it is too late.
How do you support customers that are struggling financially after the sale? Let us know in the comment section below.
