UK sees rising repossession levels
February 24, 2008
According to recent reports the UK continues to see rising repossession levels after millions of homeowners with variable rate mortgages were left struggling to repay their mortgage following a series of interest rate rises over the past year. The base rate has gone up five times since last August, and has resulted in the base rate shooting up from 4.5% to 5.75% after five rises of 0.25% each. For homeowners with variable rate mortgage this has meant a massive overall rise in repayments.
Also affected are those that took out fixed rate mortgages a couple of years ago, when interest rates were far lower. Although those on fixed rates were not affected by the rises as they occurred many are now in the process of coming out of the fixed rate deal because the term has expired, and therefore will be hit with all of the interest rate rises in one go, which could make a difference of hundreds of pounds to their repayments in some cases.
Figures suggest that there has been a rise of 70% in the number of repossessions in the UK in 2007, reflecting the massive problems that the interest rate increases have caused. Reports also indicate that in many cases lenders are selling on the repossessed home at 40% less that its value simply to get a quick sale, which means that the homeowner not only loses the home but also remains in debt.
Those struggling with repayments are urged to contact their lender right away to discuss the possible options, as many lenders will be sympathetic to the current situation and will be able to come to a temporary arrangement to ease the financial strain for the borrower. However, it is important not to simply start missing payments, as after two defaults, if no arrangement has been reached, repossession proceedings can start.
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