By Elliot Wright, 11th February 2010
The number of homeowners heavily in mortgage arrears increased
last year as repossessions shot up by 15%.
The amount of borrowers whose arrears total more than 10% of
their mortgage, for example £10,000 in arrears on an outstanding
mortgage balance £100k, rose from 24,300 to 26,200, according to
figures released by the Council of Mortgage Lenders.
Those with arrears between 7.5% and 10% went up to 18,300 from
15,600 while those with arrears of 5% to 7.5% rose dramatically
from 36,800 to 42,000.
There was however a fall in cases of homeowners with a modest
arrears (less than 5% of the balance) as those in a lesser amount
of difficulty were helped by low interests and government
assistance schemes to get back on track with their payments.
Overall, 188,300 mortgages ended the year with arrears
equivalent to at least 2.5% of the outstanding mortgage balance -
lower than the 195,000 the CML had predicted but still 3% higher
than 2008.
Meanwhile, the total number of homes taken into possession by
lenders during 2009 rose to a 14-year high of 46,000, a 15%
rise on the previous year but significantly fewer than the 75,000
that had been forecast.
Overall, 188,300 mortgages ended the year
with arrears equivalent to at least 2.5% of the outstanding
mortgage balance
The CML forecasts that there will be 205,000 arrears cases in
2010 but admits this figure may be slightly pessimistic given
encouraging unemployment figures. However, they also warn that the
economical outlook remains uncertain with rising inflation likely
to affect the currently low interest rates.
Commenting on the current level of mortgage arrears, CML
director general Michael Coogan said: "The fact that mortgage
arrears and possessions did not rise as much as we feared in 2009
is testament to the effect of low interest rates, and a great deal
of concerted effort by lenders, government and the advice sector to
help borrowers to address financial difficulties when they
occur.
"We are not out of the woods yet - 2010 will still be a
challenging year for many borrowers, and some households will
inevitably find their finances being squeezed if and when interest
rates do eventually rise. But borrowers should feel reassured that
lenders want to help them keep their homes wherever possible. The
vast majority of people who get into arrears manage to keep their
homes, and will do so even if interest rates rise. Seeking advice
as soon as financial problems occur will help to minimise the risk
of the situation getting out of control."
Useful links:
How
to reclaim mortgage arrears charges
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