In the first quarter of 2023, the challenging economic conditions, with the rise in cost of living, has led to a significant increase in home repossessions, with over 1,000 properties being taken back by lenders due to borrowers struggling to meet their mortgage obligations.
According to UK Finance, the trade association for the banking industry, there has been a noteworthy increase of 50 percent compared to the previous quarter, resulting in 750 homeowner mortgaged properties being repossessed during this period. Additionally, an extra 410 buy-to-let properties were also taken into possession, bringing the overall total to 1,160 repossessions.
Furthermore, the data shows an increasing number of homeowners falling behind on their mortgage payments, with a total of 76,630 individuals experiencing arrears of more than 2.5 percent between January and March. This marks a 2 percent increase from the preceding period. These figures indicate the impact of both the recent surge in interest rates and the rising cost of living for households across the country.
Over the past 18 months, the Bank of England has raised interest rates on 12 consecutive occasions, resulting in an escalation of mortgage rates. However, it is worth noting that most of the additional financial burden has yet to be fully felt by homeowners. Many individuals are currently benefiting from fixed-rate mortgage deals that have not expired, which shields them from immediate interest rate hikes.
It is evident that the combination of rising interest rates and living costs is putting significant strain on homeowners, which will ultimately lead to a substantial increase in property repossessions.
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