Repossessions up 1611% - Mail Online / Thisismoney

Let's remember repossession is always the last act a lender will want to take when a borrower falls into arrears. However, it's a bleak representation of the true story the UK population are facing. With escalating interest rate rises and the energy price caps being smashed, this will no doubt see further repossessions and misery poured upon everyday working families. Landlords will also be passing the price hikes onto their tenants so the private sector is going to be strained. Increasing interest rates is not the answer and we need some true leadership from the Government to get us out of this grim cycle.

I'm not surprised we are seeing an increase in repossessions and other enforcement-type actions. Many of these were stopped completely, or very heavily reduced, during the heights of the pandemic. Once those restrictions were lifted then the back-log moved forward, so we get a sharp uptick in the enforcement figures in 2022 compared to 2021.

Repossessions are always a last resort and are often a lengthy legal process. This means the data we are seeing reflects the situation of many months ago. In short this is the COVID effect followed by the cost of living crisis. Many people have simply not recovered financially from COVID and hence there is no option available to lenders or the Courts but to repossess. Unfortunately this is the tip of a very large iceberg. We are seeing a large number of early stage cases. Many of these will no doubt ultimately end in repossessions. As we see more and more people exit cheap fixed rate deals only to face significant monthly repayment increases due to higher interest rates we will see more defaults. Families that are struggling to make ends meet now will be faced with a perfect financial storm later in the year, higher interest rates coupled with higher food and energy bills. To put this in perspective, we are a long way off the peaks of the early 1990's but then we are barely getting started with this latest recession.

We should not jump to immediate conclusions because there is so much background noise around data we might lose ear to the right tone. Possessions have risen because lenders are taking action that they were temporarily unable to do during the pandemic and it takes time for that process to unfold. It is too early to see the impact of the cost of living crisis on possessions because a residential borrower will need to be in significant arrears before a lender considers commencing legal action and that action takes time. It could be a year or longer before a lender receives a possession order and even then it may not implement it. The possession of a property represents the end of a long process. Arrears figures will be the first indicator of issues. Ahead of that, increased unsecured borrowing, then non-payment of unsecured loans, then mortgage arrears. It will be next Spring before we start to see the impact of current increasing costs.