32,000 UK Homes at risk of repossession

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32,000 uk homes at risk of repossession

New research by Mojo Mortgages has found that 32,000 mortgaged properties at risk of being repossessed.

The research also found that there were 96,580 homeowner mortgages in arrears of 2.5% or more of the outstanding balance, representing a 3% increase from the previous quarter.

Within this group, 32,470 mortgages were in the most severe bracket, with mortgage arrears exceeding 10% of the balance, marking a 6% increase compared to the previous quarter.

The increase in mortgage rates has been driven by base rate increases from the Bank of England (BoE) which have also played a major role.

After analysing their internal data, Mojo Mortgages have found that the average mortgage rate when remortgaging in April 2022 was 1.78%.  However, in April 2024, the average mortgage rate soared to 5.33%.

In an effort to tame high inflation, the BoE has raised the base rate from 0.1% in late 2021 to the current 5.25%, which has resulted in mortgage rates increasing over the past couple of years.

As an example a £250,000 mortgage over 20 years, the monthly payment in April was £1,238. Fast forward to April 2024, and the same mortgage would now cost £1,695 per month – an increase of £457 per month.

That’s an extra: £5,484 over a year or 10,968 over a two-year fixed-rate term.

Date

The average mortgage rate for remortgaging

Average monthly mortgage payment

Mortgage payments over a year

April 2022

1.78%

£1,238

£14,856

April 2024

5.33%

£1,695

£20,340

Difference in the last two years:

+3.55%

+£457 more

+£5,484 more

 

What happens when a home is repossessed?

When a homeowner is unable to keep up with their mortgage payments, the lender may initiate the process of repossessing their home. This means that the lender takes possession of the property and sells it in order to recoup their losses.

The first step in the repossession process is usually for the lender to issue a notice of default. This gives the homeowner a set amount of time, typically 30 days, to catch up on missed payments or make arrangements with the lender. If no action is taken, the lender will then file for repossession with the courts.

Once an official repossession order is granted by a judge, the homeowner will receive an eviction notice and will have to vacate the property. The lender will then sell the home  at a public auction or through a real estate agent.

It’s important for homeowners to be aware of their rights during this process. They have the right to attend court hearings and challenge the repossession if they feel it is unjustified.

It’s also important for them to seek legal advice and explore all options, such as negotiating with the lender for more time or looking into government assistance programs.

Additionally, homeowners should be aware that repossession can have long-lasting impacts on their credit score and ability to secure future loans. It’s crucial to stay informed about one’s financial situation and take steps to avoid falling behind on mortgage payments if possible.

 

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