Mortgage Lender Possession Claims up 11%
According to figures published by the Ministry of Justice, the number of applications made by mortgage lenders for house repossessions rose in the last quarter of 2019. This unsettling news represented an increase of 11 per cent in comparison to the previous year (2018). In total, lenders’ claims for possession affected 6,258 homeowners and their families.
Over the last three months leading up to the festive season, orders finally granted to lenders to take possession of properties increased by nearly a quarter (24 per cent). Almost inevitably, as these new orders against owner-occupiers in payment arrears take their course, a further increase looks likely both in the repossession statistics and displaced owner-occupiers and families looking for accommodation. During the same fourth quarter of 2019, the total number of orders actually executed rose by just under a tenth (9 per cent), involving 1,149 residential properties.
Repossession Actions Rise Again
Significantly, this was the sixth quarter in a row that applications for possession had risen, after a run of consistent falls which had levelled out from the second quarter of 2019. Notably, however, these latest figures may be attributable to a leading mortgage provider that decided to resume action repossession orders that had previously been in abeyance since 2015.
Notably, the MoJ report signalled an average of sixty-eight homes repossessed every day. There was a marked regional divide too; the three highest rates of repossession orders were in a less affluent cluster in the north-east of England.
In parallel, by the end of 2019, the average period of leeway from initial lender claims to actual execution of repossession orders had decreased from 54 weeks* to only 37 weeks, i.e. less than nine months. While this seeming efficiency favours banks, building societies and other home loan providers, it unsettles hard-pressed mortgage payers.
For its part, the Ministry of Justice sought to allay borrowers’ fears by highlighting the prevailing climate of historically low interest rates. A departmental spokesperson also pointed to how lenders had become increasingly proactive and now did more to help customers manage financial difficulties.
Help for Homeowners
Other government-backed interventions such as the Mortgage Pre-action Protocol were also playing a part in assisting residential owner-occupiers who had run into difficulties in keeping up monthly instalments. Largely, this increased dialogue had replaced the former Mortgage Rescue Scheme, launched more than a decade ago but now no longer accepting applications.
The Pre-Action Protocol for Possession Claims based on Mortgage or Home Purchase Plan Arrears in Respect of Residential Property aims to ensure that lenders and borrowers act reasonably and fairly in their dealings with each other. As well as requiring clear communication, it encourages contact between the parties to seek agreement. Furthermore, it places the onus on lenders to check who is occupying a property before commencing any legal proceedings and – if the lender does resort to legal action – to use court time and resources efficiently.
In turn, industry observers voiced concern at the latest upturn in possession proceedings. In their view, the figures heralded a continuing increase in such cases, albeit from an initially low level. Commentators pointed out the downwards movements in recent growth forecasts and the prevailing instability of recent years, maintaining a wary eye on the post-Brexit economy and highlighting how uncertainty is affecting household finances.
Nonetheless, there is some good news from the property rental sector. Landlord repossessions fell by 12% over the same period, reducing to fewer than 25,000 tenants.
Finally, if you are facing concerns about your mortgage payments or the threat of repossession, we invite you to contact us. All calls are in confidence and our expert advisers will help you to select the best course of action.
*Compared to corresponding Q4 2018.
Contact us if you require expert advice and need to stop repossession of your home.