The Council of Mortgage Lenders (CML) has recently revealed that mortgage repossessions are (thankfully) at an all time low! Figures show that for the first quarter of 2016 (January, February and March), the number of properties repossessed was just 2,100.
This might sound like a lot, but to give you an idea of how this figure actually stacks up, it might help to know that 19,583 repossession claims were issued in 2015 in total.
Therefore, if this year’s trend continues, annual repossession rates for 2016 would be just 8,400 – much lower than any year since 1982. That number becomes even more impressive when we consider that there were far fewer mortgages back then too.
So, why are repossession rates falling?
These figures certainly imply that homeowners are coping better with their mortgages than they have done in previous years.
It’s unlikely that this is due to borrowers having more money to pay their mortgage than previously (given that wages aren’t rising as much as predicted and housing is still quite expensive), but it does indicate that mortgage lenders are perhaps getting better at helping people who are falling into arrears.
Lenders are entitled to repossess your home if you don’t pay as agreed
While it’s true that lenders are entitled to repossess your home if you don’t pay as agreed under the terms of your mortgage (unless you have insurance that will pay out for you), it seems that fewer mortgage lenders are actually taking such drastic action.
The figures from the CML suggest that lenders are working harder with borrowers to help them through difficult times, negotiating the terms of a mortgage or temporarily reducing or freezing monthly payments.
The Money Advice Service explains that lenders might be prepared not to repossess a home (at least for a short while) if borrowers get in touch as soon as possible and reach a compromise. So, perhaps it’s this empathetic approach that accounts for the low number of repossessions in the first quarter of 2016.
What are your options if you can’t pay your mortgage?
Financial advisers recommend that you should quickly get in touch with your lender if you’re not able to pay your mortgage, as doing so will reduce the likelihood of repossession.
Negotiate to see what arrangement you can agree upon to prevent yourself from slipping further into arrears, and rest assured that lenders aren’t allowed to seek repossession unless all other reasonable attempts to resolve the situation have failed.
If all else fails, you can stop house repossession by selling your home instead. This might be the right decision if you know your financial situation isn’t likely to change in the long term, allowing you to buy somewhere cheaper or rent a more affordable property. Ask your lender if you can stay in the property until you’ve sold it.