Many homeowners at risk of losing their properties

July 30, 2008

According to a recent report many homeowners will be at risk of losing their homes over the coming year and a half, with over one million set to face the risk of losing their home. The data has come from a report by the UK’s financial regulator, the Financial Services Authority, with officials stating that a number of factors will affect the ability of many homeowners to keep up with repayments on their mortgages, despite the fact that interest rates have been cut twice in the space of several months.

According to FSA officials there are a number of risk factors that put some homeowners – namely those that purchased properties between 2005 and 2007 – at increased risk of losing their home, and the more of these risk factors that are met the higher the risk of losing the home. The three main risk factors are having put down a deposit of under 10%, having taken on a mortgage for over 25 years, and having borrowed more than 3.5 times the borrower’s annual salary.

The FSA claims that around 25% of homeowners that purchased a home, remortgaged, or took out a home loan between 2005 and 2007 are at increased risk of losing their home through repossession in the next eighteen months. Although interest rates have fallen twice in the last three months other costs such as energy bills, petrol prices, and food costs, have been rising.

An official from the FSA stated: ‘We are not saying this scenario will definitely happen but we want to raise awareness of the risks. With continuing uncertainty over the economy, it is more important than ever for people to take care of their finances. Anyone with debts, including mortgages, should take stock, review their budget and make sure that it is affordable if there is change in circumstances, such as a job loss or a rise in interest rates.’

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Posted by admin | Filed Under Homeowners, Mortgages 

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