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Repossession Rate to Stay Low in 2016, According to HML
This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
The repossession rate for homes in the UK will stay low over 2016 if interest rate rises are further postponed as anticipated, according to HML, the UK’s leading mortgage service firm.
Repossession Rate to Stay Low in 2016, According to HML
In its annual forecast, the HML said that it expects a total of 10,326 repossessions in the UK during 2016, which would account for 0.09% of mortgages. The prediction arrives as the Council of Mortgage Lenders (CML) reports the lowest level of repossessions on record.
This figure would represent a second consecutive year of low repossession rates, although HML reports that the threat to the UK steel industry could mean more repossessions in South Wales and other regions where jobs are at risk.
The CEO of HML, Andrew Jones, says: “Repossession is an extremely difficult time for any household, and HML works with mortgage providers to identify those at risk and provide support during times of financial difficulty.
“Another year of low repossession rates is welcome, but we shouldn’t ignore the prospect of big increases when interest rates eventually rise.
“Those hit hardest by other financial pressures, such as unemployment, are at particular risk, and if the UK steel industry deteriorates, we can sadly expect repossessions to increase in communities that are affected.”
HML is the only company that publishes mortgage repossession forecasts broken down into the English regions, Wales, Scotland and Northern Ireland.
It expects Northern Ireland to have the highest repossession rate, at 0.27%, in 2016, with the South West and East Midlands having the lowest, at 0.06%.
HML’s figures vary significantly from those suggested by the CML in December last year, which forecast a sharp increase in repossessions, to 18,000.
HML believes that the difference relates to a change in expectation over the timing of interest rate rises, which the CML expected to occur in the second half of 2016, but is now not expected until 2017 at the earliest.
In September last year, HML stated that an interest rate rise would hit first time buyers particularly hard, expecting 20,000 to fall into arrears if the base rate rose by 1.5%.
Although the repossession rate looks set to remain low, concerns have been expressed about rising house prices, as the HomeOwners Alliance reports that the housing crisis is deepening.
