Good news for homeowners - but will it last?

Repossessions fall - but is this the calm before the storm?

The Council of Mortgage Lenders (CML) today announced a decline in the number of housed repossessed by mortgage lenders in the second quarter of 2010. In the three months to the end of June, there were 9.400 repossessions, down from 9,800 in the previous quarter and considerably below the same quarter last year, when 11,800 properties were taken back by first charge mortgage lenders.

As a result, the CML have revised down their forecasts for repossessions in 2010 as a whole from 53,000 to 39,000, a reduction of around 25%.

The number of mortgages in arrears has also reduced, with 178,200 mortgages in arrears equivalent to 2.5% or more of the mortgage balance. This is 5% lower than at the end of March and a whopping 17% lower than the same period last year.

These figures have surprised many in the industry, with mortgage difficulties being contained below the levels that the CML expected at the start of the year, and in comparison to the recession at the start of the 1990s.

I don’t want to be accused of talking down this good news. But I’m afraid that this is just a lull, an aberration, before things get worse. There are some important factors that make this downturn different to the 1990s recession. Firstly, the headline interest rate is at an historic low: at some stage, rates will start to increase and many homeowners who are currently struggling to keep their heads above water will sink beneath the waves. Secondly, the Government is struggling to cope with crippling levels of debt and has indicated that wide-ranging cuts in public spending will be used to help balance the books. Nobody knows for certain what the effects of those cuts will be, but rising unemployment and increased job insecurity will surely become a reality for many more homeowners in the months and years to come.

If you have financial problems and are worried about how this will affect your home, call me today on 01709 331300 for a free, no-obligation and confidential chat.

More people than ever are becoming insolvent

Insolvency statistics give cause for concern

Official figures released by the Government’s Insolvency Service today show a 5% increase in the number of people getting into serious financial difficulties in the last three months. Although the number of bankruptcies has dropped by nearly 20% in the past year, the overall number of people becoming insolvent has increased as greater use is made of alternative ways of tackling high debt levels.

It seems clear that many people are struggling to cope with the effects of the downturn and record numbers are becoming insolvent. Job losses and cuts in overtime payments are making life difficult for households. This means that debt that was previously affordable can become a real problem. And as public sector spending cuts start to kick in, the situation is likely to get even worse.

In the first six months of 2010, over 70,000 people have become insolvent – the equivalent of a town the size of Barnsley or Chesterfield.

The cost of becoming bankrupt has increased in recent months and this may have encouraged people to look at alternatives. In particular, the new Debt Relief Order has become more popular since it was introduced last year. The good news is that there is help available – but I would recommend that anyone in difficulties should take advice from a reputable organisation. Beware of unsolicited calls offering advice that sounds too good to be true.

To find out what all your options are, call me today on 01709 331300.

Getting away from it all can lead to problems back home

Millions get into debt for a holiday

The insolvency trade body R3 released figures today showing that over 2 million holidaymakers have got into debt to pay for holidays this year and will spend an average of seven months paying it back.

The research, carried out in the middle of July by pollsters GfK NOP reveals that 2,329,500 people had to borrow on average £1,130 to pay for a summer getaway.

Now I like a holiday as much as the next insolvency practitioner and to many, a spend of just over £1,000 on a big holiday may not be too shocking. In fact, I wonder if the ‘real’ figure for holiday spending is much more, but the individuals surveyed didn’t have an accurate idea of exactly how much they would spend: the flights and hotel may be around £1,000 but how much more unplanned spending goes on food and booze, sightseeing trips and souvenirs?

In my experience, the problem often tends to be that the holiday spending comes on top of other unsecured debts that have mounted up through the year. This kind of spending can be the final straw for many people, who return home to credit card bills and loan repayments that they simply can’t afford.

The good news is, no matter how debts have been incurred, there is help available. If you’ve returned from your summer holidays and found that you’ve got more than a few photos and a bottle of the local firewater to remind you of your trip, give me or one of my colleagues a call on 01709 331300. We can help.