/ Home & Energy, Money

Are you worried about repossession?

Our latest research has found that one in four people with a mortgage are worried about having their homes repossessed. Is there anything government and lenders can do to address this lack of confidence?

Our Quarterly Consumer Report report found that more than 50% of people under 30 who don’t already own a home are worried about getting on the property ladder, and over half the population are worried about their mortgage rates. So what’s the government doing to help these people?

No help for first-time buyers

I’ll start with the recently launched Funding for Lending scheme, which is designed to boost lending to households and businesses. It encourages banks and building societies to lend by allowing them to borrow money from the Bank of England for up to four years at below-market rates. So far, 13 lenders have signed up.

Following the launch of the scheme, a number of big high street names cut their interest rates on selected mortgage deals, making some of them the lowest fixed-rate deals that have ever been offered in the UK.

So it sounds like good news, until you realise that many of these competitive deals were aimed solely at low-risk borrowers with large deposits. When some of these mortgages require deposits of up to 40%, it’s clear that they’re not aimed at first-time buyers.

Mortgage prisoners

We think the government should introduce clearer rules for the Funding for Lending scheme to make sure banks and building societies pass on this cheap finance to first-time buyers and ‘mortgage prisoners’.

Our report found that mortgage prisoners are often people aged between 30-49. They’re trapped in their current mortgage deal, as they are unable to switch if and when their rates increase. This group already has the greatest housing-related costs, as we found they’re spending on average £186 a week, compared with the national average of £135.

We‘d also like to see greater transparency from the banks and building societies that have joined the Funding for Lending scheme, including publication of details of their mortgage lending under the scheme.

Difficult times ahead

So, home ownership is increasingly out of reach for first-time buyers, while many mortgage prisoners are unable to move or remortgage. This is all thanks to a lack of mortgage lending, the need for a large deposit to get on the housing ladder, high mortgage arrangement fees (which we found have risen by around 60% in the past eighteen months), rising rents and squeezed household budgets.

If banks are going to take advantage of cheap funding, I think they should be under tougher obligations to pass the benefit on to those consumers who are currently struggling. If not, a whole generation could find itself unable to get on to or move up the housing ladder, while the fear of repossession could become a painful reality.

Comments
Profile photo of william
Member

“No help for first-time buyers” Yes interest may be the lowest they’ve been for several years but you omitted to mention many of these mortgages have very hefty fees for those on want them. So the banks aren’t really helping there.

I think the biggest problem in this day and age is too many people want everything and then complain when they can’t afford it. If you want to own your own home then forego alot of the pleasures you take for granted without caring how much its actually costing you. Holidays, regular evenings out, mobile phones all cost money. We’re no longer in a world were you can have it all.

I’ve been unemployed 25 months now, and I’m not worried about being repossessed and yes I do have a mortgage, and I haven’t missed payment in those 25 months ( 25 months without a penny from the govt. or council). But then I’ve not been on “holiday” for over 15 years, and it wasn’t my choice to go on one then.

Profile photo of mike770
Member

NOBODY SHOULD REPOSEESED ONLY REVERTED TO A RENT TO mortgagor, it is criminal the way these fraudulent operators work, most cases the principle has been/ or near re payed,

Profile photo of william
Member

In theory, I’d agree with you, in practice, since many rents are alot higher than a mortgage I’m not sure how that would work.

Profile photo of mike770
Member

well home taken away, then most cases are then treated as homeless, and get Housing Benefit to-wards rent, so we the tax payer pays either way????

Member
Annie says:
24 October 2012

I would like a conversation by mortgagees who do not have a fund to repay interest only mortgages. Mine has got 15 years to go but ill health has meant I cannot work enough to build a fund for repayment. I have never missed a payment. What will they do? My mortgage was with Northern Rock, now Virgin. I would gladly extend the mortgage if they let me but using normal criteria I would no longer rate a mortgage. I will not follow the advice to “contact your lender if you are in trouble” because in my lengthy experience the less they know the better.
I have a feeling this issue is going to be huge in a few years. If you are ill the DWP only pays part of the interest, the sick person pays the rest out of benefit. That’s OK, but if the sick person has a fund built up for mortgage capital repayment over a certain figure the DWP won’t pay anything.
I am not whinging about the rights or wrongs of this, but will the lenders extend the mortgages? They have nothing to lose.

Member
Annie says:
24 October 2012

Following my previous message I would like to calm “Gang” down in advance by saying I paid 40% tax as a self employed person for most of my life, did voluntary work, looked after my old Mum. So please hold your fire.

Member

Mortgage prisoners: – I would like to see this group helped to move to a better interest deal as many of them are only unable to do so because thier loan to value % has risen dramatically following the property price crash. My daughter has lost her initial deposit and more since the value of her property has dropped. She is now in a no win situation being unable to move to a cheaper rate and unable to sell as she would still be left with a substantial debt even if she could find a buyer.