So far this year, a total of 27,500 properties have been taken into possession – 4 per cent fewer than in the equivalent period last year. Levels of mortgage arrears remained reasonably stable over the same third quarter period.
Desperate measures
Low interest rates and lenient lenders have definitely helped limit the figures but it’s clear now that other economic factors are forcing people to take more desperate measures. Rising inflation, a 17-year high in unemployment, the spiraling cost of living and a very weak mortgage market have all compounded to limit people’s options and remove the financial ‘safety net’. In some of the more extreme cases, they have no other option than to pay their mortgage on their plastic just to keep the roof over their heads.
Research from the homelessness charity Shelter earlier in the year found more than two million people had used a credit card to pay their mortgage or rent in the previous 12 months – an increase of nearly 50 per cent.
Help from lenders
Lenders are helping and are continuing to exercise their discretion when it comes to people in arrears. As long as people can hold onto their job, dealing with mortgage arrears should always be the first priority, followed by unsecured debt. That’s exactly where Individual Voluntary Arrangements (IVAs) and debt management can help as they automatically prioritise payments to secured lenders, which includes provision for clearing arrears. It is then relatively simple to get unsecured loans on reduced payments until the individual can increase their income.
“Mortgage Payment Protection Insurance (MPPI), not to be confused with Payment Protection Insurance (PPI) which has had some pretty bad press recently, is also really important. It’s basically private insurance taken out to make sure mortgage payments are made even in the event of unemployment or sickness. Often referred to as ASU (accident, sickness and unemployment) insurance, this type of insurance is more important now than it’s ever been.
Sally Bowyer, Managing Director of financial claims specialist BrunelFranklin.com says: “PPI per se is not a bad product, however the onus is on the vendor to ensure the product is the best for your needs at the time of sale. If the best product for your needs was not offered, or if you were unaware of the true cost, for example, you may have grounds for a refund. Unfortunately, the mis-sale of PPI policies is by no means unusual. Customers may well wish to protect their loan repayments, but all too often they have been sold products that were completely unsuitable for their needs.”
Learn more about PPI refunds and find out if you could apply for a refund today! Visit the website www.brunelfranklin.com or call Brunel Franklin, free, on 0800 051 54 51.