Repossessions could increase in 2015
According to data released by the Council of Mortgage Lenders (CML) there could be a slightly higher number of properties that are repossessed in 2015. The figure is set to increase from 21,000 in 2014 to 22,000 in 2015. The number of homeowners that are in arrears with their mortgages is at it lowest level since 2006 and now stands at just 2.5% of all mortgages.
There is some disagreement over the forecasts for next year as other experts predict that more homeowners will get into difficulty as interest rates start to rise. Everybody has got used to record low levels base rates and there is a lot of concern that many homeowners will struggle when the rates start going up. A recent survey carried out for the Money Advice Service showed that nearly half of the respondents would struggle if there mortgage payments were to increase by £150.00 per month.
a recent study also carried out by the Bank of England also showed that nearly 500,000 homeowners would get into financial difficulty if the base rate was increased to 2.5%.
The base rate is currently 0.5% and has been at that level since 2009. There is also some disagreement over when the base rates may increase with some economists now saying that the base rates may not go up until the end of 2015. There is also the fall out from the crisis in Russia that has not been considered and the recent news from Greece where a snap election has been called. This will have an impact and is possible going to delay the raising of interest rates according to some financial experts.
One of the main drivers for mortgage arrears is higher interest rates as borrowers struggle to meet increased payments. Many borrowers that took part in the survey said that there were some items they could cut back on when interest rates increase making it possible to meet the new payments. Another reason for borrowers falling into arrears is loss of employment. The good news however is that unemployment levels are falling and this looks unlikely to be a factor.