Loan Repossesions Could See Rise
The past two or three years have left many borrowers in a difficult position financially, particularly when it comes to keeping up with their repayments on their home owner loan or mortgage. With increasing unemployment figures and adverse economic conditions, loan arrears have been rising and many borrowers have ended up facing repossession.
Due to financial help from the government and extra leniency from banks and building societies for those people struggling with their loans, many individuals who may normally have had their home repossessed due to the level of loan arrears, have had their possession orders suspended by their lender, due to the current adverse conditions.
However, the Consumer Credit Counselling Service (CCCS) has warned borrowers with loan arrears that there could be a dramatic increase in the number of repossessions in the coming months, as the housing and home owner loan markets see continued signs of recovery.
The debt charity has advised many borrowers on their loan arrears situation and has warned individuals that, although many lenders have been lenient towards borrowers with loan arrears, this can not go on forever and as market conditions improve, repossessions are likely to increase once again.
The situation is likely to be exacerbated in October once the Government’s Mortgage Interest Payment support package is reduced by almost half, for those who have suffered unemployment.
Delroy Corinaldi of the CCCS said “There is no doubt that lenders have shown leniency towards debtors during the recession by not enforcing suspended possession orders. However, this leniency may have been partly determined by the markets.”
“In addition, some lenders are increasingly showing reluctance in allowing struggling debtors to switch to interest only mortgages as a short term solution, giving people the necessary breathing space to find other more sustainable options.”
