News Column

United States : Mortgage arrears and repossessions decline

August 16, 2014

The number of houses being repossessed and mortgages that are in arrears have significantly decreased.

The number of homes that were repossessed has continued to fall in the second quarter of 2014.

The Council of Mortgage Lenders (CML) found that there were 131,400 mortgages that were in arrears of 2.5 per cent or more at the end of June, which was 6,8000 less than three months earlier at 138,200. This new figure is also down a significant amount - 23,500 to be exact - from last year s 154,900.

The fall in numbers was present across all bands and means that the overall amount of mortgage arrears is at its lowest since the first quarter of 2008.

It was not just the number of mortgage arrears which decreased, as a total number of 5,400 properties were repossessed in the second quarter of 2014, down from 6,400 in the previous quarter. Again, there was a significant change also from last year from 7,600, meaning a total drop of 2,200 in the past 12 months.

CML director general Paul Smee said of the data:"Another fall in arrears and possessions is clearly welcome and shows that borrowers, lenders and money advisers are generally continuing to work well to contain payment problems where they arise, helped by an improving economy and low interest rates.

However, households must be aware that with these drops, lending rates will begin to rise and it is important that borrows bear this in mind and begin to prepare for it.

Mr Smee added: "We welcome the message from the Bank of England that, when it raises rates, it plans to do so in a series of 'baby steps', matched to a careful assessment of the ability of households to deal with higher borrowing costs.

While this may bring uncertainty to borrowers, there is encouragement in the figures found by CML as they depict that it is possible to deal with financial difficulties.

For more stories on investments and markets, please see HispanicBusiness' Finance Channel

Source: TendersInfo (India)

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