Homeowners who have fallen into serious arrears difficulty owe an average of £7,021.
The data is from debt rehabilitation provider Ascent Performance Group, which defines ‘serious’ arrears as when borrowers have defaulted on monthly payments for six months in a row. At this point many lenders pass customers onto debt rehabilitation specialists to help recover the money they are owed.
Between July and September the average mortgage debt owed by each of these struggling homeowners was £7,021. Compared to the April to June period, this represents a slender 1.1 per cent rise, but it’s a 20 per cent jump from the average £5,584 owed in the January to March period.
The statistics suggest that despite overall economic improvement – with the number of people in mortgage arrears falling compared to this time last year – for some people things are still getting worse.
Ascent chairman Mark Higgins explains:
“A welcome development in recent years has been mortgage lenders giving customers more time to settle their arrears problems before passing them onto debt specialists, especially since the introduction of the Mortgage Market Review. However, if they can’t make contact with the customer then their debt will naturally increase before we are instructed.
“Therefore, it is our job to make contact with these customers and agree affordable, long-term repayment plans that divert the danger of possession.”
Of all customers who have fallen into serious arrears between July and September, over half have begun to fix their situation. Of these, 33 per cent have set up a suitable repayment plan or cleared their debt in full, whilst 24 per cent have paid off some of their debt to reduce arrears to the equivalent of less than three monthly payments. The remainder have not yet found a solution.
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