"A shock 11% increase in repossession claims and 24% rise in mortgage orders by county court bailiffs point to British households increasingly being weighed down"
The government data shows that mortgage possession claims have increased year-on-year for six consecutive quarters, following a three-and-a-half-year period of stability. There has been an annual increase in mortgage possession claims of 11% (to 6,258), mortgage orders for possession have increased by 24% (to 4,459), and repossessions by 9% (to 1,149).
The UK Finance figures show that 1,330 homeowner mortgaged properties were taken into possession in Q4, an annual increase of 17%. 660 buy-to-let mortgaged properties were taken into possession, a 20% year-on-year rise. However, UK Finance noted that the increases are "from a very low base" and levels remain well below those seen between 2009 and 2014.
UK Finance says the increase in possessions has been driven in part by a backlog of historic cases which are now being processed.
UK Finance also reported a rise in repossessions in Q1, Q2 and Q3 2019.
Steve Wilkie, managing director of Responsible Life, commented: “A shock 11% increase in repossession claims and 24% rise in mortgage orders by county court bailiffs point to British households increasingly being weighed down by financial pressures and struggling to make ends meet.
“This sudden rise points to financial stress in the economy and will be a trend closely watched for signs that a more stable political climate since mid-December has been unable to reverse it.
“Borrowers have a tendency to be shy about discussing concerns and changes in circumstances with their lender when they start struggling to repay a loan because they fear it will affect the rates they are offered. But this can lead to a build-up in financial distress, until ultimately lenders are forced to reach for the last resort of repossession."
Mark Pilling, managing director at Spicerhaart Corporate Sales, said: “The latest UK Finance figures show that the long-term trend for increased mortgage possession activity is continuing. Although this is from a low base, it is still a sign that the uncertainty and low economic growth of recent years is catching up with household finances.
“The data also points to an ongoing regional divide, with the three highest rates of repossessions all in the North-East of England. Interestingly, this is where many of the Conservatives’ recent electoral gains came from so it is clear they will be under pressure to deliver on their talk of ‘levelling up’ regional economies.
“At the same time, regulatory changes are coming into force which, although well-intentioned, may have the short-term impact of making life more difficult for many people already struggling to make ends meet. People being required to step up repayments on credit cards and potentially pay more for authorised overdrafts will put even greater pressure on household finances.
“Repossession should always be the last resort and lenders should always look to find another option if it is available. The lenders we work with all have a clear strategy in place to identify borrowers who are at risk of falling behind with payments and engage with them deliver the best possible customer outcome.”
