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Rate rise would hike repossessions
19 June, 2007
Moore Blatch has predicted an increase in mortgage repossession following claims about a further Base Rate rise.
Figures recently published by the Department of Constitutional Affairs (DCA) show that repossession claims and orders have risen by one per cent across England and Wales in the first quarter of 2007 since the first quarter of 2006.
Although repossessions have flattened over the past year, given the underlying trends between interest rates and mortgage repossession claims, Moore Blatch warn that we could see a significant upswing in repossessions as the increasing rate takes effect on mortgage repayment costs.
Repossession claims have been rising sharply since 2003 although at a decreasing rate. Between 2005 and 2006, repossession claims had risen by 29 per cent, following a 36 per cent increase from 2004 to 2005.
Paul Walshe, head of lender services at Moore Blatch, said: “Repossessions lag behind certain events, such as interest rate rises. This is because often the rises do not impact immediately and the borrower may be on a fixed rate deal. Repossession also often only occurs in conjunction with another event, such as employment issues, family breakdown or divorce. What we do expect to be impacting more quickly is a rise in buy-to-let possessions, especially if the housing market weakens and landlords are unable to sell quickly.”