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Mortgage repossessions and the pandemic

Could the increasing cost of living cause more people to not be able to pay their mortgage?

Buying and selling property

Inflation in October 2021 according to the Office for National Statistics was 4.2% which is the highest it’s been for nearly a decade.

The consensus amongst economists seems to be that inflation is going to remain high for a while.

The BBC have calculated that with these inflationary pressures, the cost of living for an average family may go up in 2022 by about £1700.

Traditionally central banks have responded to inflation by raising interest rates.

All of that means that household budgets will be under pressure and a raise in interest rates would raise Mortgage costs for those who are not on fixed rate mortgages.

That could increase the number of mortgage repossessions taking place.

We have been lucky during the pandemic in the sense that mortgage repossessions have not risen a lot above pre covid rates and they have been historically low prior to that because of low interest rates for a long period.

However, unfortunately, that may be about to change. House prices have gone up a lot recently so people may have had to stretch themselves to afford to buy, and an increase in mortgage rates along with inflation pushing up other household costs, could tip some people over the edge into not being able to pay their mortgage.

On a more positive front there has been quite a lot of support for people experiencing problems paying their mortgage during the pandemic with payment holidays and suspension of repossession proceedings.

Much of that has now ended and Courts are now granting repossession orders but it’s worth being aware of the obligations on lenders if you get into difficulty.

The first thing to do, always, is speak to your lender. If you think you are struggling to pay your mortgage speak to your lender and do it as soon as possible. Mortgage arears do not automatically lead to repossession. In fact, the Financial Conduct Authority which regulates lenders has issued guidance saying that repossession should be a last resort and that lenders should offer borrowers support tailored to their particular circumstances. For more details of that guidance which lenders should follow see here:

Despite all of that if you do find yourself involved in repossession Court proceedings, do not ignore them. If court papers are sent to you deal with them and respond. If the Court fix a hearing date make sure you attend. Even though possession proceedings may have been started a Judge does not have to order immediate repossession and if you engage with the court, you may still be able to save your house. You may want to get advice from a lawyer, and we hope that our website can help you find a lawyer who specialising in debt and housing matters. Many courts will also have a duty lawyer present at court on repossession days who may be able to assist you.