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  • Debt & Negative Equity

    More families in arrears than at crash height



    More families are struggling to keep up with their mortgage bills today than at the height of the financial crash, the UK's financial watchdog has revealed.

    As part of a thematic review published today, the Financial Conduct Authority found that there are 14,000 more households in serious arrears of more than 12 months than there was in 2008.

    That comes despite mortgage rates being near record lows and the regulator has warned that banks will start to repossess more homes if interest rates rise.

    Jonathan Davidson, executive director of supervision, retail and authorisation at the FCA said: 'In 2008, the number of homes in serious arrears, of more than 12 months, was 56,000. The repossession rate per year was 22 per cent.

    'We found that the number of homes in serious arrears has risen to 70,000, but repossession rates per year have dropped to 2.7 per cent.

    'It makes sense [for banks] to forbear when interest rates are low. If interest rates start to go up, I’m afraid the repossessions will also rise.'

    Full/source article 

    If you are facing mortgage arrears or financial difficulty, please contact Property Tribes' partner Landlord Debt Advisory, the only FCA regulated company in the UK authorised to give professional debt advice to landlords.  They can be contacted on 0161 222 4311.

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    Since the families who do not have a mortgage are likely to be paying rent instead it begs the question as to whether a similar proportion of renters are also in arrears?

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    Agreed Annie, not to mention if interest rates rise and many more people have properties repossessed - including landlords.  This will further exacerbate the housing crisis.

    This is also relevant to this thread:

    The rental income received by 79% of landlords with mortgages is only sufficient to service the interest element of their loans, and not pay down their debts, as they contend with rising costs, according to new research.

    The data, unearthed by the National Landlords Association (NLA), has prompted the association to examine the narrative that tenants are just paying off their landlord’s mortgage.

    In a discussion paper launched in London this week, the NLA and PricedOut, the campaign for affordable housing, looked at both sides of the argument.

    The NLA holds that there are many costs to running a successful lettings business that tenants are either unaware of or do not consider in this debate.

    Full/source article

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    "The rental income received by 79% of landlords with mortgages is only sufficient to service the interest element of their loans, and not pay down their debts, as they contend with rising costs, according to new research".

    This is really interesting.  I have long held the belief that those talking of 'greedy landlords' actually believe that the rent goes straight into the LLs pocket and are not aware of the costs involved.

    Hopefully this discussion paper will be shared in the public domain and will start to go some way towards addressing the unceasing bad press we are subjected to.

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    These type of landlords will still be bashed for getting themselves into their own dire situation anyway, can't see people sympathizing with landlords anytime soon. The only people that do sympathize are other landlords, haha.

    Certainly interesting times we live in.....will there be a crash or will everything just stagnate for years with super low interest rates....?

    I think a lot of people will always spend above their means and get themselves in trouble. Last time the powers that be were able to lower interest rates and save a lot of owners and landlords (including me) with high LTV from getting into trouble, but next time there's nowhere for rates to go. S24, help to buy trap, rising interest rates, Brexit....wow, talk about looking grim.

    When this eventually pops I just hope I've got enough cash left to grab some bargains.

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    I assume arrears will increase further when interest rates rise and will be accompanied by an increase in repossessions and wonder what impact that will have on property prices and if the BOE included it in their assumptions of a 30% fall in property prices.

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    Christmas presents are more important than paying a mortgage. What would your friends say about you if you didn't have the latest iphone x? God, it doesn't bear thinking about.

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    It would be interesting to look at the previous say 3 years spending pattern of those in trouble to see instances of purchases that didn't help their situation.

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    And when these future repos occur, presumably many of these families will be looking to private landlords for help. We should use examples such as this whenever we’re told we’ve ‘created the demand’!

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    Unlikely to pass credit referencing for most landlords

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    More families in arrears than at crash height- well what a surprise one would never have guessed. Once again the idiots at the FCA  well behind the curve and stating the obvious. Where were they in late 2006 early 2007 when the biggest financial crash for decades was about the break.

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