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Home repossessions to leap more than ten-fold by 2022

Christina Hoghton
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Christina Hoghton

The end of payment holidays, furlough and other government schemes will result in more mortgage arrears and repossessions

A UK Finance forecast suggests UK mortgage arrears and repossessions will surge after the debt payment moratorium ends on 1 April 2021.

The regulator is keeping this date under review, but UK Finance forecasts suggest we could see home repossessions rise from 2,900 last year to 22,300 by 2022.

Mortgage arrears will also rise to 142,200 this year from 81,300 last year according to the trade body, but fall back to 120,900 in 2022.

A UK Finance spokesperson said: “Possessions last year reached an historic low due to the moratorium introduced in March 2020, alongside the unprecedented support provided by lenders to customers impacted by Covid-19. However, we anticipate possessions will likely increase as these emergency measures are lifted and lenders work through cases that have been put on hold, most of which were already in train before the pandemic.”

He said the number of possessions is forecast to remain well below the levels seen a decade ago and lenders will continue to show flexibility to borrowers in financial difficulty, turning to possession only as a last resort after a thorough court-based process has carefully considered the borrower’s individual circumstances.

“There is a range of tailored support available and possession is only ever a last resort, so we would urge customers facing financial pressures to get in touch with their lender to discuss the best solution for them,” he said.

Help from lenders

FCA guidance released this month: ‘Mortgages and Coronavirus: Tailored support guidance‘ outlines the protocols mortgage lenders and other financial firms should employ if borrowers are struggling.

Its payment deferral guidance confirms all borrowers can delay payments for up to six months as long as the last monthly installment is no later than July 2021.

All customers should receive appropriate forbearance from their lender and the regulator states:

“Customers should receive the support they need in managing their finances, including through self-help and money guidance. Firms should signpost or refer them to debt advice if this meets their needs and circumstances.”

The regulator offers consumer guidance here, including speaking to your lender in the first instance and repaying anything toward your monthly payment, even a reduced amount.

Sue Anderson, spokesperson at debt charity StepChange, said: “While we haven’t yet experienced the tsunami of demand for debt advice that is forecast to arise when temporary forbearance ends, we know it is coming. The tenfold forecast increase in mortgage repossessions by 2022 anticipated by UK Finance is obviously a real worry. Housing insecurity, across both the rented and owner-occupied sectors, looks to be one of the most damaging impacts from the pandemic if left unchecked.”

Anderson added that StepChange anticipates increased demand for holistic advice on housing and other debt that will emerge as payment deferrals and other temporary help unwinds.

“The ban on rental evictions and mortgage repossessions and the extension of payment deferrals have all been important in keeping people hit financially in their homes, but it’s abundantly clear that we also need long-term plans to address the household debt legacy that the pandemic will leave in its wake,” she said.

“Revisiting Support for Mortgage Interest should be a part of this – the safety net isn’t currently fit for purpose in supporting households to keep their homes in the post-Covid landscape,” said Anderson.