Date: 7th September 2010
September 7 2010 - The number of house repossessions continues to fall, according to latest figures from the Council of Mortgage Lenders (CML) - but this could just be a smokescreen, warns national debt advisor Payplan.
CML’s forecast for 2010 repossessions has been revised from 53,000 to 39,000 while mortgage arrears in the first half of the year dropped by 5%.
But these positive figures could be painting a false picture and the autumn could see a return to bad debt mortgage, says John Fairhurst, managing director at free debt advice provider Payplan.
“Low interest rates have driven down mortgage repayments but this bubble will burst and the prospect of higher interest rates is inevitable. Combine this with a rise in both the cost of living and unemployment and it could be a rocky time ahead.”
Mortgages debt continues to be a growing concern for debt advice providers such as Payplan with homeowners representing over 60% of new callers, a rise from 40% in 2008.
“Despite historically low interest rates the proportion of homeowners calling us for help is at an all time high and for this reason we treat the CML figures with caution. Our own experience suggests it is a problem only in temporary decline,” adds Mr Fairhurst.
Advice from Payplan for anyone who finds themselves in mortgage arrears or who fears their home could be in jeopardy in the near future, is to act quickly.
Payplan advises people to consider the following:
* If you fall behind with mortgage repayments you’ve broken your contract with your lender. You MUST talk to them immediately. Contrary to opinion, the last thing a lender wants is to repossess your home. Most lenders will be able to offer more affordable payments or even a payment break depending upon your circumstances.
* If you find yourself in a temporary cash flow problem – your income has been cut or you’ve lost a job but know you can find other work – then try to work out a plan of when you can start making payments and catch up on arrears and tell your lender so.
* If you have fallen into arrears because of other debts then it is essential that you get advice about your wider debt problem. To try and deal with just one debt in isolation rarely works long term. Our average caller with mortgage problems also owes money to nine unsecured creditors. Contacting an impartial free debt counselling service such as Payplan: www.payplan.com - 0800 280 2816; the Citizens Advice Bureau: http://www.citizensadvice.org.uk/getadvice.htm - to find your local CAB branch; or the National Debtline: http://www.nationaldebtline.co.uk/ - 0808 808 4000
would be a good place to start.
“Nobody wants to see anyone lose their home and this really is a last resort,” adds Mr Fairhurst. “What many people don’t realise is that there is much that can be done to stop this happening but the secret is to deal with a problem immediately, don’t bury it and hope it will go away – the chances are it won’t go away it will just become significantly worse.”
Note to editors
* Payplan was established in 1993 and is one of the UK’s leading providers of free debt solutions. Its award-winning service helps over 100,000 people in financial difficulties every year. With no fees to pay, it is a first choice for people wanting help with budgeting, loans and credit card bills, repossessions and mortgage arrears.
* Quoted figures from the Council for Mortgage Lenders represent the second quarter of 2010. More information is available from : http://www.cml.org.uk/cml/media/press/2680 The third quarter results will be published on November 11.