Mortgage default levels haven’t peaked yet
November 16, 2009
Over recent years a rising number of people have fallen behind on their mortgage repayments, with financial problems being fuelled by the global credit crunch and the recession.
This rise in the level so mortgage defaults has led to a rise in repossession levels, with many people losing their homes as a result of being unable to keep up with repayments. This increase in property repossessions has caused much concern amongst industry officials.
However, there is concern that whilst repossession levels have already soared the situation could get worse, as reports have claimed that mortgage default levels in the UK have not yet peaked.
This means that a rising number of people could continue to default on mortgages, and the level of arrears could increase, which in turn could see the number of repossessions go up despite the low base rate and despite measures being taken by the government to try and reduce repossession numbers.
The increase in unemployment is one of the major factors that will affect default levels in the UK, and has recent figures have proven the nation is still not out of recession, leaving it lagging behind other major economies.
A recent report has suggested that default levels will actually peak in the UK in around twelve to eighteen months, so there is still some time to go. However, the good news is that they are not expected to reach the same levels that have been seen in the United States, where foreclosure levels have been going through the roof.
A number of measures have been taken to try and reduce the level of defaults and repossessions in the UK. The base rate has been at an all time low of 0.5 percent for the past seven months in the hope that this will increase affordability for homeowners, and lenders have been urged to be lenient with those that do fall into arrears rather than steaming in to take repossession action right away.
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