One in five sub-prime mortgage holders are struggling
A survey by the housing charity Shelter has revealed that one in five sub-prime mortgage holders are struggling to keep their payments up to date with a significant 5% (37,000 borrowers) expecting to have their homes repossessed over the next six months. However, it was also revealed that up to one third of the 260,000 sub-prime mortgage holders questioned expect to fall behind with their payments if their incomes should fall significantly in the short to medium term.
When you compare these figures against expectations that the UK Council of Mortgage Lenders will shortly announce that a total of 45,000 homes were repossessed last year, there would appear to be a significant increase in the rate of repossession. The 37,000 who expect their homes to be repossessed in the next six months do not cover the wider market as this was specifically targeted at the sub-prime end. The six-month rate of 37,000 equates to a full year rate of 74,000 homes but this figure could rise markedly once the wider market is taken into consideration.
All in all it appears as though the UK property market is still under serious pressure and it is worth remembering that there is a significant time lag between an economic downturn and the repossession of homes. Whether the government's promise to give more homeowners more breathing space in the short to medium term makes any difference remains to be seen.
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