Repossession rates for UK property set to stay low for 2016

Repossession rates for UK property set to stay low for 2016

HML, a mortgage servicing firm, has said that the number of UK homes repossessed in 2016 will remain low if, as expected, interest rate rises are once again put on hold.

Interest rates have been kept at record lows of 0.5% since 2009 and there are no signs of any imminent rises from the Bank of England, especially with concerns about the global economy and the uncertainty over the EU referendum weighing heavily.

They are not expected to rise again until 2017 at the very earliest.

As part of its yearly forecast, HML has predicted that a total of 10,326 repossessions will take place across the country in 2016, equivalent to just 0.09% of all mortgages.

This would mean a second successive year of low repossession rates. However, HML warns that the current crisis afflicting the British steel industry could lead to more repossessions in South Wales – which has a large steel community – and other regions, such as the North East of England, where jobs are deemed at risk.

While low repossession rates are a good sign – and an indicator of a healthy market – HML has a few words of caution.

People suddenly and unexpectedly being made unemployed are at particular risk, while worries over the decline of the British steel industry – although the situation currently looks more promising – could see a considerable number of communities affected.

HML also revealed that any interest rate rises, while great news for savers, would probably hit first-time buyers hardest.

Back in September 2015 it projected that 20,000 first-time buyers could fall into arrears if the base rate rose to 1.5%.

From a regional perspective, HML predicts that Northern Ireland will have the highest repossession rates for 2016 (0.27%), with the South West and East Midlands having the lowest (0.06%).

All in all, though, low repossession rates for the last two years running is hugely positive news, highlighting the robustness of the housing market, the UK’s improving economy and low unemployment levels.

What’s more, low interest rates might not be much use to savers, but they are good for those with mortgages or those looking to acquire a mortgage for their first home.

The EU referendum is causing some understandable market uncertainty, but as has been proven in the last few years the property industry can remain in pretty good shape no matter what the external factors might be.

These latest repossessions stats are just another confirmation of that fact.