DOOMSDAY predictions of mass repossessions ripping through the housing sector are misguided, a leading property association has said.
Reports last week showed repossessions have almost doubled as crippling costs lead to borrowers falling behind on mortgage payments.
According to official figures there were 744 mortgage repossessions by bailiffs in England and Wales between July and September which is 90pc higher than the same period last year.
But the National Association of Property Buyers say despite claims by some that repossessions will sky-rocket, there are reasons for optimism.
Spokesman Jonathan Rolande said: “Whilst one repossession is one too many, we should not be too alarmed by these recent figures. Worrying as the number is, when seen in context it is clear that we are not anywhere near the misery of the early 90’s or late 2000’s. Back then quarterly repossessions were 18,000 and 11,500 respectively so at their worst they were a shocking 25 times higher than today.
“There are many reasons to be hopeful that this Doomsday scenario does not repeat itself once again. The reason for the increase can also, in part, be blamed on Covid. Not only did this harm many people’s income but it also caused queues in the court system as they reopened post-lockdown. Many of the 744 will have been a long time coming and so I think the figure should now become more steady.
“That said we shouldn’t be under any illusion – things remain on a knife-edge in the sector. High prices, high rents, high interest rates, high cost of living. All of these will impact the property market. But for now, we should not fear mass-repossessions but instead try to find ways to support the relatively small number of people who find themselves in this dreadful situation.
Setting out the reasons why he believed repossessions wouldn’t soar, Mr Rolande added: “Firstly, house prices have risen. This means that people who bought a few years ago will have seen their home’s value jump by around 20%. Having substantial equity in the house means it can be sold on the open market to avoid repossession if repayments have become unaffordable.
“The average age of a recent first-time buyer is now 34. In 1997 it was just 26. As buyers have been becoming increasingly older, their likely financial stability has also improved.
“Also, there are still plenty of buyers. In previous downturns, the market was simply stagnant, it was almost impossible to sell some properties, whatever the price. That is not the case at all now.
“We must also be mindful that rents are high too. This is a disincentive, if any were needed, to anyone considering handing back keys but it also means that at the right price, there are plenty of landlords hoping to buy for investment.
“There haven’t been 100% – or even 125% mortgages since 2008. This means the average repayment figure will be less and the owner will have invested their own money into the property – something they won’t be willing to walk away from. Finally, banks have lent more responsibly. As well as lower percentages, they have also stress-tested loans to make sure a rise in rates can be afforded. The dramatic climb after the Kwarteng Budget caught everyone by surprise and caused great concern, but as rates return to earth, the pressure is easing.”
Last week’s data showed possession claims by lenders, the first step in the repossession process, surged by almost a third from 2,832 to 3,680, while warrants have jumped by 157pc.
The number of landlords attempting to evict tenants has also jumped, reaching a record high after the eviction ban introduced during the pandemic ended.
Mortgage repossessions are still at roughly half the level seen before Covid. However, the MoJ said they had increased significantly in the past year.
Meanwhile Rental arrears has meant more than 1,700 landlords were in arrears of 10pc or more on their mortgage, according to UK Finance.
