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July 20, 2010    

Debt charity warns of impending repossessions rise

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by Gill Montia
”Debt

A leading debt charity has warned that repossessions could increase, despite a rallying of the UK economy.

The Consumer Credit Counselling Service (CCCS) believes that a recovering housing market could make lenders less lenient and more likely to repossess.

The charity is aware that a “large number” of its clients have suspended repossession orders on their homes, which lenders have chosen not to enforced despite borrowers having missed payments ordered by the courts.

According to CCCS director of external affairs, Delroy Corinaldi, while lenders have shown leniency towards debtors during the recession this may have been partly determined by the downturn in the housing market.

To add to their woes, mortgage borrowers in arrears face a change to the Support for Mortgage Interest (SMI) scheme in the autumn.

The government-backed scheme involves lenders reducing monthly mortgage payments by deferring interest, which can be settled at a later date once the borrower’s financial circumstances have improved.

The SMI rate was frozen at 6.08% in late 2008, although interest rates have since fallen significantly.

In the June Budget, Chancellor of the Exchequer George Osborne announced that from October, the rate would be paid at the level of the Bank of England’s published Average Mortgage Rate, to “better reflect” mortgage costs.

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