You are here: Home - Mortgages - Buy To Let - News -

Repossessions to surge when mortgage repayment holidays end

0
Written by: Liz Bury
16/07/2021
A surge in repossessions linked to the end of mortgage payment holidays in two weeks’ time may be enough to rebalance supply issues in the housing market, according to property listing website Home.co.uk.

The firm warned of a possible surge in repossessions and distressed sales when 2.9 million mortgage payment holidays granted by lenders in response to the pandemic end on 31 July.

Home.co.uk director, Doug Shephard, described the scheme to protect borrowers as having seen the housing market become “essentially disconnected from the economic woes of the coronavirus pandemic.”

He said that although lenders were in some cases offering ongoing tailored forbearance, questions remained as to how many borrowers who took payment holidays would get back on track with repayments.

The scheme gave borrowers the option to take up to six months’ worth of payment holidays from March 2020 to 31 July 2021.

Shephard noted that while the size of the upcoming surge was hard to estimate, it might well be enough “to radically affect the balance of supply and demand. Be warned,” he said.

The caution came as Home.co.uk published its Asking Price Index showing stock of property for sale in England and Wales hit a new low of 273,531 in June. The dearth of supply had supported price growth of 8% annually to an average £340,678.

The Financial Conduct Authority reported in April that 19% of the top six lenders’ mortgage customers had deferred payments. That proportion rises to 28% among non-bank lenders.

Shephard said: “It is clear that mortgage forbearance and the furlough scheme have essentially disconnected the housing market from the economic woes of the pandemic. Rising house prices have also insulated mortgagees from financial distress as they see their equity rise in value.

“At some point, however, the music may stop and lenders will need to recover their bad debts, leading to a surge in repossessions and distressed sales,” he added.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Everything you wanted to know about ISAs…but were afraid to ask

The new tax year is less than a fortnight away and for ISA savers or investors, it’s hugely important. If yo...

Your right to a refund if travel is affected by train strikes

There have been a wave of train strikes in the past six months, and for anyone travelling today Friday 3 Febru...

Could you save money with a social broadband tariff?

Two-thirds of low-income households are unaware they could be saving on broadband, according to Uswitch.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week