Actions entered by lenders the first stages of repossession rose by 29 per cent over the past year to 33,442 reports The Royal Institution of Chartered Surveyors (RICS). And orders made to repossess properties were 57 per cent higher over the past 12 months at 21,997 in the fourth quarter of 2005.
RICS believes that the main reason behind the upturn in repossession activity is the rise in interest rates that began at the end of 2003 and continued to August 2004. These rises increased mortgage interest payments by a substantial margin and so an upturn in repossession activity is not a surprise.
Figures from the Bank of England show that average interest rate on a standard variable mortgage is well below levels of this time last year. In addition, the average interest rate on a five-year fixed mortgage remains low at 5.11 per cent, having fallen significantly in the past year.
The sustained rise in unemployment during the past year has played a key role and suggests that the numbers entering into the repossession process are likely to increase further during the second quarter, says David Stubbs, RICS economist. Moreover, as interest rates are set to increase later this year, the upward pressure on repossessions will not abate quickly.
Loading ...