The number of home repossession legal action claims launched by lenders over unpaid mortgages has surged by more than a quarter against the background of higher interest rates.
The number of repossession claims involving properties owned by landlords and rented out rose by 6 percent to 24,874.
Craig Fish, Director at Lodestone Mortgages & Protection said: “Though this data makes hard reading and is extremely worrying, it’s not unexpected due to the significantly higher interest rate environment in which borrowers now find themselves.
“We are seeing a worsening trend and one, sadly, that is going to continue for some time.
“What is more worrying, however, is the inability of the decision makers at the Bank of England to see beyond their ivory towers and realise that households and businesses up and down the UK are struggling to make ends meet.
“Things need to change and quickly before it’s too late. We urgently need a base rate cut.”
The pressure on home buyers saw the government negotiate a Mortgage Charter with the major lenders designed to help those struggling to make repayments.
The major elements an option to switch to interest-only payments for six months or extend their mortgage term to reduce their monthly payments.
The deal was heralded by the Chancellor of the Exchequer, Jeremy Hunt, who said: “These measures should offer comfort to those who are anxious about high interest rates and support for those who do get into difficulty.”
However, the Managing Director at EHF Mortgages, Justin Moy, told Newspage: “Higher mortgage rates have increasingly got a stranglehold on households.”
He said the higher repossession numbers “highlight how higher rates have impacted mortgage borrowers, and how that trend is worsening all the time.”
Mr Moy said: “This demonstrates the Mortgage Charter hasn’t helped everyone enough, and there will be undue pressure on the state to support the tenants forced to move out as landlords’ properties are reposessed.
“The problem we’re facing is not being tackled effectively and proactively, merely kicked down the road for another government to deal with.”
Ben Perks, Managing Director at Orchard Financial Advisers, said: “I feared this was on the horizon and I’m concerned these figures will continue to rise.”
He said that while the Mortgage Charter was a helpful initiative it did not provide the respite that was desperately needed.
“The Bank of England seems totally oblivious to the plight of the average mortgage borrower, but hopefully this data will kick their hesitancy to drop the base rate firmly into touch. The time to act is now. The Bank of England must absolutely cut rates in June in
order to save many families’ homes,” he said.
Stephen Perkins, Managing Director at Yellow Brick Mortgages, said: “As the cost of living crisis and increased mortgage rates continue to bite chunks out of household finances, it is incredibly sad, but unsurprising to see so many families failing to pay their mortgages or rent.
“Many lenders have no choice but to take action against them. With no respite in sight currently, there may still be worse to come in these measures as the year progresses.”
High interest rates have been a particular issue for buy to let landlords, many of whom went into the property market to supplement their retirement income.
Katy Eatenton, Mortgage & Protection Specialist at Lifetime Wealth Management, said: “This is a sorry state of affairs for all the borrowers and tenants affected.
“Rental properties are so important in society and with rates increasing to a level that is unsustainable when you factor in the new taxation rules, it was only a matter of time for this to happen.
“Lenders are trying to help borrowers by reducing rates but increasing fees, but it doesn’t seem to have worked based on this evidence. Many households are under immense financial pressure and the Bank of England seems oblivious to that fact.”
Michelle Lawson, Director at Lawson Financial, accused the government of failing to take the housing crisis seriously, adding: “The Government, and is not even a senior department, the state of the private rental sector, high interest rates and the damage the Government has caused means these grim figures are not surprising.
“The tenants are the long term sufferers here, too, as landlords are exiting the industry, which is causing a further supply and demand issue that will send rents up further.”
“The court system is broken. It shouldn’t take nearly half a year for a landlord to regain possession of their property. Tenants are often told to not pay rent or make themselves voluntarily homeless otherwise they are not entitled to council assistance.
“This then adds to the financial pressures of the local councils where we are seeing more and more nearing bankruptcy. It is a disgrace that it has got to this stage.”
Director at Brooklyns Financial, Harps Garcha, said: “The spike in the cost of living and relentless upward march of the base rate has left many homeowners and landlords in a brutal position.
“From my chats with local estate agents, it’s clear to see how many homeowners are feeling the strain, with repossession requests stacking up. And to add insult to injury, landlords are finding themselves dipping into their own pockets, even after hiking up rents, just to stay afloat with their investment expenses. These are tough times, no doubt about it.”
Hannah Bashford, Director at Model Financial Solutions, warned: “The report makes for grim reading and paints a bleak picture of the housing situation in the UK.
“Unaffordable mortgages, unaffordable rents, little to no social housing available… when does it end?”
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