Last month, the Council of Mortgage Lenders (CML) reported that the number of homes being repossessed in the UK has fallen to its lowest level since the end of 2010. There were just 8,500 repossessions in the second quarter of the year, down from 9,600 in the first quarter.
The drop has come despite the economy falling into recession and the high level of unemployment with the CML highlighting that low interest rates and help for unemployed mortgage borrowers is starting to have an impact. “The figures show that lenders, borrowers and debt advisers are working together to get through the current period of economic difficulty and keep mortgage possessions in check,” said the CML’s director general, Paul Smee. This means that repossessions are running at a slower rate than the CML had expected. Its original forecast for the whole of this year was that 45,000 homes were likely to be seized by lenders.
The first point to make about this development is that it has been driven by agencies working across traditional boundaries. Their collective effort has had a positive impact and helped more people than expected. The sum of the parts has definitely delivered more than what was expected from the individual components!
Secondly, the environment has been created for this to occur through the government’s Support for Mortgage Interest (SMI) scheme. This covers the mortgage interest payments of unemployed people on up to £200,000 of their home loan with the support kicking in after a 13-week waiting period – a temporary rule that has been in place since the start of 2009. This scheme is due to revert to its original 39-week waiting period at the end of this year. The change could put a halt to the positive working relationships and result in a glut of repossessions, not to mention the human tragedy of people losing their homes. Now firmly in the grip of a double dip recession those in power need to carefully consider decisions made months and years ago.
Looking to create growth also requires a strategy to support those facing tremendous hardship at home, possibly before we look to huge investments abroad.