Home repossessions have remained stable in the first quarter of 2012, with a total of 9600 home repossessions in the first three months of the year. This is identical to the same period in 2011 according to the Council of Mortgage Lenders and is good news for the UK property market and home owners.

Homes are repossessed when home owners fall behind on their mortgage repayments and are unable to pay. Pressures on household finances, the increasing cost of living, high unemployment and rising mortgage rates can all contribute to higher levels of repossessions. In 2011, for example, over 35,000 UK homes were repossessed, while figures peaked in 1991 with 75,500 house repossessions. Repossession is considered to be a last resort, and as Paul Smee, director of the CML comments: “Anyone worried about their mortgage should be assured that lenders will try to help them get back on track, as long as this is a realistic prospect.”

The number of people falling behind in mortgage payments has also decreased in the first quarter, with the number of mortgages with arrears of 2.5% or more of the outstanding balance falling to 157,800 from 170,500 a year ago. The number of those with arrears of 10% of the outstanding amount or over is still significant.

These are promising figures for the UK property market and CML is even considering lowering its previous forecast of 45,000 repossessions for 2012. Part of the reason for the decrease in repossessions is that mortgage lenders have been tightening their borrowing criteria in recent months. On the other hand, mortgage rates have also increased recently.

It is crucial that lenders show caution and flexibility when it comes to lending criteria and the management of mortgage payments, in order to avoid more repossessions. As Mark Harris, chief executive of SPF Private Clients comments: “Lenders must continue to show forbearance and look after customers who are struggling by letting them switch to interest-only, take payment holidays or extend their mortgage terms.”

At the same time, potential home buyers and home owners should also show forbearance in order to avoid having to go through repossession. Here are some tips to help you avoid repossession:

  • Before taking out a mortgage, think carefully about your financial situation and get professional advice if you think it’s necessary.
  • Speak to your lender, explain your situation and try to negotiate terms that will let you keep your home.
  • Be aware of your lender’s obligations. For example, lenders must consider a request from you to change the way you pay your mortgage.
  • If you are allowed to rent or sell the property, you might consider these possibilities.
  • You might be able to change the type of mortgage.
  • Seek legal and professional advice at any point if you think it will help you keep your house and manage your payments better.

If you need residential conveyancing or legal advice about renting a property, tenancy agreements, mortgages or commercial property, contact Morgan Kelly Solicitors to find out more about our legal services.

Photo © Pierre (Rennes)