Mortgage Repossessions 'likely to increase'

22/01/2010

Repossessions and debt problems are likely to increase as the recession continues to affect families, an industry expert has said.

Problems in the property market are likely to continue for some time as rising interest rates and inflation take their toll, a spokesman from an independent property investment consultancy has said.

Timothy Lambert, head of consulting at Ducalian, said: "Once interest rates start to rise and they have to at some stage, we will see more repossessions as mortgages become unaffordable for some families who have had wage cuts or even gone from two salaries to one as a result of the recession."

Mr Lambert said that while buyers struggled to get on to the property ladder, the market itself would recover naturally due to supply and demand.

He advised renting as a viable alternative to buying because "with the lack of liquidity to people with average credit ratings, now is the time to rent and save up a deposit in order to buy when we pull out of recession".

The average asking price of a house in the UK stood at £222,261 in early January, according to a Rightmove report.

Director of EuroDebt Kevin Still commented: "The Council of Mortgage Lenders (CML) is forecasting an increase in re-possessions this year and concern has been expressed that some of the reason for the downward projection last year was because of the rise of SARB (Sale and Rent Back) transactions which aren't included in the figures.

"If inflation pushes up interest rates early and other lenders follow Skipton's lead then there could be serious debt misery and a rising need for non-borrowing debt solutions."

Tags; Housing Debt and Bills,

Regional Debt Advice; Debt Advice Skipton,

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