18/12/2009

Review Issues Repossession Warning

The latest edition of the most authoritative guide to the UK housing market calls for the government to extend the safety net for home owners to ensure that repossessions do not continue to rise in 2010 with growing unemployment.

The UK Housing Review 2009/10 published by the Chartered Institute of Housing (CIH) and the Building Societies Association (BSA) identifies the importance of government initiatives to protect home owners at risk of repossession but calls for an extended credible safety net to be put in place for the long-term. 

Useful temporary measures have included reducing the nine month delay before unemployed home-owners can get help with their mortgage interest payments under the Support for Mortgage Interest (SMI) scheme, deferring the reductions in the SMI standard rate of interest and extended forbearance policies provided by lenders.

The number of repossessions will be lower in 2009 than the peak of 76,000 in 1991 – but the outlook for 2010 is still uncertain.
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Analysis of repossessions by CIH's consultancy arm - ConsultCIH - published in October 2009 identified some clear financial similarities and patterns of household behaviour. ConsultCIH predicts that if interest rates begin to rise steadily in 2010, people who have taken out a mortgage in the past four years, and those who have re-mortgaged in the past five, are more likely to be at risk of repossession. 

At the same time, research published by the Building Societies Association has shown that the sooner a borrower contacts their lender or obtains free independent money advice the greater the chances of them staying in their home. The research found that 97% of borrowers who fell into arrears during the last two years have remained in their homes, demonstrating the effectiveness of the approaches taken by the vast majority of lenders.

Richard Capie, CIH Director of Policy and Practice said: "A long term safety net for vulnerable home owners is essential if we are to support people to stay in their own homes throughout the recession and beyond."

(CD/KMcA)

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