A large increase expected in repossessions next year

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by Kay Murchie

The Repossessions Advice Centre (RAC) has forecasted that 2008 could see an increase in repossessions with homeowners having an ‘extremely tough year’.

The predictions echo those of the Royal Institution of Charted Surveyor (Rics), who also forecasted an increase in repossessions by 30% over the next year.

Paul Fletcher of the RAC said several fixed-rate mortgages have been taken out during the last 2 years due to rising interest rates. Clearly, people have been trying to stabilise themselves. These deals are now expiring and these people are now struggling to remortgage because the lenders have just tightened their lending criteria.

Mr Fletcher added that the majority of these people aren’t going to be able to get a new mortgage , even with their existing lender. The RAC estimates that these people who are seeing their current deals run out could see the cost of their mortgage repayments increase by 65%.

Mr Fletcher believes that 2008 will be an extremely tough year with a large increase in repossessions. He advised that if borrowers do get into trouble, they take action immediately rather than ‘waiting for the inevitable to happen’.

If a homeowner is faced with repossession, there are structures in place which the courts will address to clear arrears and put a feasible payment structure in place. There are choices so it’s far better to deal with the situation before it occurs concluded Mr Fletcher.