UK’s repossession story not over yet
A leading credit rating agency has warned that government cuts and tax increases could result in a rise in repossessions across the UK housing market.
According to Standard & Poor’s (S&P), the house price crash did not bring the average cost of a home in line with household incomes, and measures yet to be implemented by the Coalition Government could “significantly test” some mortgage borrowers.
In recent years, UK lenders have been exercising forbearance over mortgage arrears, keeping repossessions below estimates, but S&P has noted that Britain has a “high percentage” of subprime borrowers in arrears, and suggests that job losses or a jump in interest rates could cause a wave of repossessions.
The firm’s report follows a recent warning from the Consumer Credit Counselling Service (CCCS).
Last month, the national charity revealed that has on its books a number of clients with suspended repossession orders, lenders having not yet enforced orders, despite borrowers failing to meet repayments ordered by the courts.
However, the CCCS suggests that a hardening of attitudes by banks and building societies could lead to a rise in repossessions in 2011.