Mortgage borrowers quash arrears

| September 15, 2009 | 0 Comments
”Mortgage

Research from the Building Societies Association (BSA) claims that over the last two years, the majority of borrowers who have fallen into arrears with their mortgage repayments have either caught up, or are in the process of catching up.

According to the BSA, 97% of borrowers in financial difficulties have avoided repossession with thirty-three per cent making up their repayments in full, while 41% are currently repaying arrears.

Twelve per cent have come to an arrangement with their lender but are not yet repaying their arrears.

However, 3% had their property taken into possession by their lender.

Borrowers who spoke to their lender promptly were more likely to repay their arrears than those lingered.

The Association’s head of mortgage policy, Paul Broadhead, says: “The results highlight the importance of borrowers contacting their lender as soon as they face potential payment difficulties, and seeking independent advice.

Other findings of the study are as follows:

The most common cause of arrears was the loss of a job or income, chosen by 43% of respondents.

Arrears caused by events that disrupted a borrower’s livelihood tended to persist, compared to arrears caused by fluctuations in expenditure that were relatively easier to repay.

Fifty-nine per cent of borrowers in arrears agreed to some extent that their lender treated them fairly, with 17% disagreeing.

Fifty eight per cent thought that their lender was very or quite helpful, but 18% thought their lender was very or quite unhelpful.

The most common source of the funds to repay arrears was work; working additional hours or getting a new or additional job contributed to the repayments of 60% of borrowers that had repaid or were repaying their arrears.

The BSA points out that as unemployment rises, it might become more difficult for borrowers to repay their arrears in the future.

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