Repossessions rise predicted

16 July 2009

Uncharted Territory report

Shelter today launched a new report, 'Uncharted territory?', which examines how mortgage arrears and possessions are currently managed by both lenders and borrowers, and predicts more repossessions in the coming years.

The report concludes that while lenders have improved their arrears and repossession practices, levels of arrears are still rising and there could be a second wave of repossessions in 2010/2011 once interest rates rise again and short term prevention schemes come to an end.

The research, conducted by Professor Janet Ford and Dr Alison Wallace from the Centre of Housing Policy at University of York, aimed to provide a clear overview about how arrears and possessions are at present being experienced and managed by borrowers and lenders in this period of unprecedented financial and economic turmoil.

Using evidence collated from mortgage lenders, the finance industry, regulators and borrowers themselves, the report puts forward a number of risks and implications for policy-makers including:

  • Government initiatives could be postponing rather than preventing repossessions.
  • Future interest rates rises could fuel arrears and ultimately lead to a second wave of repossessions.
  • Lenders are currently not repossessing to avoid potential losses from the property sale. However, this will undoubtedly change once the market picks up again.
  • Advice services are helping borrowers to avoid repossession, but may not be able to cope with the increasing demand.
  • The current safety net does not work well for many people experiencing a loss of income.

The report highlights the clear need for further action and experts from across the sector came together today to discuss these very issues and propose possible solutions.  Professor Janet Ford lead the discussion, joined by Kay Boycott, Shelter’s Director of Communications, Policy and Campaigns, Kellie Evans, Head of Collections, GE Money and Christine Whitehead, Professor of Housing Economics at LSE and Director of Cambridge Centre for Housing and Planning Research.

Read the report in full