Have Home Repossession Fears Been Exaggerated?

This week, the Governor of the Bank of England, Sir Mervyn King, has said that in his opinion fears of a wave of home repossessions have been overstated as UK interest rates are set to remain low.

He made the statement in response to recent comments made by the head of UKAR (UK Asset Resolution), Richard Banks, which holds mortgages once owned by Northern Rock. Banks claimed that a "tsunami" of home owners would lose their homes once rates increased. He went on to say that a number of families faced being repossessed unless lenders prepared them for the impact of higher rates. He also said that some 23,000 of the 750,000 mortgages UKAR owns are at least six months in arrears.

His warning comes on top of others, including from the Council of Mortgage Lenders earlier this month, which forecast that repossessions will rise to 40,000 this year from 36,000 in 2010. Sir Mervyn added that consumer borrowing charges such as mortgages, which are generally already several percentage points higher than the base rate, were unlikely to rise as quickly and that when there was a rate rise there would be a delay in it feeding through to other borrowing costs.

If you are having difficulty paying your mortgage at the moment or are worried about whether you will be able to do so in the future when interest rates ultimately increase, you should speak to your lender as soon as possible to try and come to an arrangement and also check to see whether you are entitled to help from one of the numerous Government mortgage schemes that are on offer.