Fears over home repossessions exaggerated
June 28, 2011
The governor of the Bank of England, Sir Mervyn King, has recently voiced his opinion about rising fears over repossession levels in the UK, branding them as exaggerated. Many are concerned that the UK is in line for a wave of repossession, but King has said that this is something that has been overdone, as interest rates are set to remain low for some time to come.
The governor of the central bank said that now was not the time to increase the base rate, adding that even when interest rates did increase there would be an interim period before this was reflected in borrowing costs. His comments come after the head of UKAR claimed that when interest rates went up there would be a ‘tsunami’ of repossessions across the UK.
Mr King was addressing the Treasury Committee when he said that there was no planned rate increase at the moment because the economy would not be strong enough to cope with it. He added that a rate rise would only be considered if the economy was stronger and unemployment figures were falling rather than increasing. He also said that borrowing costs for consumers were unlikely to increase at the same rate as the base rate.
King said: “The reason we would raise interest rates would be in the context of a much stronger economy with unemployment falling rather than rising.” He added: “It should also be the case that the interest rates that borrowers face should not rise as fast as the rise in bank rate.”
However, in a recent interview Richard Banks, the chief executive of UKAR (UK Asset Resolution), said that the company was being proactive in contacting customers to ensure that they would be keeping up with repayments because of fears over interest rate increases making repayments unaffordable.
He said: “You can see if you don’t do something about it, you can see a tsunami. If you don’t get into the hills you could get drowned by this. If you don’t manage this properly it could get very messy.”
- Thirty percent rise in mortgage arrears A recent report has shown that although the base interest rate has fallen to its lowest level in history, at just 0.5 percent, the level of mortgage arrears in the UK has soared by 30
- Increase recorded in repossession numbers It has been reported recently that the number of repossessions has increased as cash-strapped homeowners once again struggle to cope with finances and keep up with repayments. The figures relating to repossessions was released by
- Homeowners need to get finances in order to cut risks A stark warning has recently been issued to homeowners in the UK - to get their finances and their homes in order to avoid becoming part of the rising number of repossessions predicted for next
- Pressure off for homeowners as repossession levels fall The release of recent figures has indicated that the pressure for homeowners in the UK may have eased off, with data showing that the number of repossessions in the UK fell by 7.5 percent in
- Repossession levels may not be as high as predicted The Council of Mortgage Lenders has stated recently that the level of repossessions likely to go ahead over the course of this year may not be as bad as originally estimated, and as such the
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