Mortgage arrears figures signal need for debt solutions

16/12/2009

New mortgage payments figures have shown a slight improvement in the financial position of UK homeowners.

According to the Financial Services Authority (FSA), 2.57 per cent of mortgages carried arrears of over 1.5 per cent of the total owed by the borrower over July-September 2009.

This is a decrease from the 2.63 per cent recorded for the previous three months, suggesting that mortgage holders are finding it slightly easier to meet their monthly repayments.

Recent figures from the Council of Mortgage Lenders (CML) differ slightly from the FSA data, showing that arrears decreased from 2.8 to 2.61 per cent over the same period.

However, unlike the FSA's report, the CML does not include second charge lending - when a homeowner takes out extra credit secured on the property - in their totals.

Separate figures from charities Citizens Advice and Shelter have also underlined the fact that many households require debt help due to their mortgage costs.

The research suggested that one in three of those facing repossession had not been offered adequate alternatives, such as renegotiating their loans with their lenders.

CML director general Michael Coogan said: "The FSA data reflects what our numbers have already portrayed.

"Arrears and possessions are lower than expected earlier in the year, and the majority of the population have been choosing to stay on their SVRs or move to trackers, rather than take out fixed rate mortgages."

Kevin Still, EuroDebt director, added: "The affect of low interest rates seem to have allowed some to make a dent in their mortgage arrears.

"For others it was too late. EuroDebt would expect to see mortgage arrears rise again if interest rates start to rise in latter part of 2010. Around one third of the homeowners starting a Debt Management Plan with EuroDebt have early stage arrears on secured borrowing."

Lenders predict that around 47,000 properties will be repossessed in the UK during 2009, after borrowers fell too far behind on their repayments.

Tags; Housing Debt and Bills, Young Family Finances,

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