"We could see increased levels of arrears as commercial borrowers lose tenants, residential borrowers struggle to pay their own mortgages and landlords struggle to pay"
Because of the area we work in – helping lenders find solutions for customers in arrears – Brexit will probably result in increased business for us.
Last year, arrears and possessions were at an all-time low for much of the year, but due to Brexit, the first rate rises in years and problems within the retail sector, we predicted that we’d start to see an increase in arrears and eventually, repossessions, and we did.
In December, the latest mortgage lenders and administrators statistics revealed that the value of outstanding mortgage balances with arrears increased for the first time since 2016.
At the time, I said I feared it could be the start of a more permanent shift and it looks as though this will be the case.
We can see that consumers racked up a record amount of credit card debt in October last year, and we haven’t even seen the impact of Christmas spending yet, a time when many families overstretch themselves, so the likelihood is, the level of consumer debt is now even higher.
But while credit card spending is up, the High Street is still struggling, suggesting that part of the issue is that people are not even spending on the High Street but are instead increasingly relying on credit cards for everyday purchases, which is clearly not a sustainable way to live.
It also means that we could see a repeat of last January, when every day there seemed to be another announcement of jobs cuts in the retail sector or another well-known brand leaving the High Street for good.
If this does happen, it will affect the commercial mortgage market as well as families working in the retail sector and we could see increased levels of arrears as commercial borrowers lose tenants, residential borrowers struggle to pay their own mortgages and landlords struggle to pay as their tenants start falling behind on their rent payments.
We are expecting to see an uplift in our own business as more lenders come to us looking for the best solution for their customers who are in arrears or have an interest only mortgage which has reached the end of its term.
Repossession should always be the last resort, so we urge lenders to identify borrowers – both residential and commercial - who are struggling or are likely to struggle now so that they can start to find solutions sooner rather than later.